The sky seems to be the limit for AI when it comes to the wealth management space. Industry expectations for this new technology could not be higher – if only advisors and investors knew what to expect!

In order to learn more about AI and how it will change the financial advisory business, InvestmentNews checked in with David Bailin, CEO and founder, CIO Group. The CIO Group is an AI-enabled, independent wealth manager that helps identify opportunities and risks which may be invisible to other advisors.

InvestmentNews: Where do you see AI being most effectively applied in wealth management today, and how do you envision it shaping the industry over the next 3–5 years?

Bailin: To understand the impact that AI will have on wealth management, one needs to understand what AI can do today and the way its capabilities will expand exponentially. Today, AI is a talking machine. Users ask it a complex question and it provides a thorough answer. Tomorrow, AI will be your colleague. Literally. So, for wealth managers, AI agents will be able to read and summarize the news, monitor companies and send alerts, conduct full scale research on markets and so on. In 2026, AI agents will work in 20-30 minute sprints. 

That may sound far-fetched, but in just a few years ‘long horizon AI’ will soon allow Chief Investment Officers to have AI agents working all day long on CIO related tasks. Long form AI will be able to perform core wealth management administrative tasks – compliance oversight, portfolio monitoring, model and risk management and so on. And AI Agents will be interactive, too. That’s where we are going.

What AI cannot do well is think ahead, to understand events that have never happened before and make strong judgements about them. That’s why understanding the limitations of AI is essential when building new wealth management business models.

InvestmentNews: Do you see AI as a tool that will meaningfully reduce costs or save time for advisors, and if so, in which specific areas?

Bailin: There is no doubt that AI will be able to save money and time for advisors. Many advisor tasks are administrative and repetitive. For example, AI will conduct financial planning, proposal generation, client communications and initial prospecting. All of these can be automated without losing quality. 

However, the adoption of AI Agents will require advisors to spend time learning how to use the technology. AI Agents will need to be taught the tasks and learn the methods an advisor wishes to employ. For ‘old school’ FAs, this will be much more of a change than using a new software package. That’s why it is incumbent on RIA and brokerage management teams to steer FAs toward AI experiences that will have them understand just how beneficial AI Agents can be for them. I expect some advisors will become wildly more efficient and effective, whereas others will see their businesses stall.

InvestmentNews: What inspired the creation of CIO Group, and why was AI chosen as a core focus?

Bailin: CIO Group was created to fix what’s broken in traditional wealth management, where many investors suffer unknowingly from weak performance, generic portfolios, and high, opaque fees. Too often, advisors charge for customization, but place clients into standard models. And when someone has accounts at multiple firms, no one is managing the combined risks. CIO Group is free of big-bank legacy systems and limitations, so we can align our services solely in the service of our clients’ best interests.

InvestmentNews: What are the biggest hurdles you face when implementing AI in wealth management, and how are you addressing them?

Bailin: Working with AI is both complex and deeply worthwhile. There are few off-the-shelf AI solutions for wealth management in general, and none that specialize in Chief Investment Officer portfolio solutions.  We have assembled and sequenced different AI tools to achieve our goals. And we have learned that the development of an AI-focused business is iterative. You have to build, test and implement, then refine — and do the same repeatedly.  Another hurdle has to do with what we call “moments of judgement”. Certain processes require  human intervention. For example, we may want to try two or three portfolio designs and stress test them before choosing one to implement.  We are building these human reviews into our processes. 

InvestmentNews: Are there any areas where the promise of AI in the wealth management business are currently overstated in your opinion?

Bailin: The most troubling use of AI is in the area of models and algorithms to manage money. There are no ‘Morningstar‘ ratings for the portfolio management models currently in use. There are 10,000 or more models in use now. And when clients ask advisors about what is actually happening with the model that is managing client assets, they are often hard-pressed to explain the basis of the model or how it is reacting to changes in geopolitics or macroeconomics. 

AI is not a substitute for human judgement and AI is a poor predictor of the future.  It is trained on prior events and data and it can sometimes see valuable patterns. But what it cannot do is make good judgements based on truly new circumstances. This week, the US intervened in Venezuela, threatened military action in Iran, had negotiations on the future of Greenland and the administration proposed a cap on credit card rates. This increases the fragility of markets. That’s why you need minds, not models.  AI is not a substitute for the hard work of decision making. 

This article is part of our Monthly Spotlight series, which in January focuses on AI in Wealth. Full coverage can be found here.