The Role of AI and Empathy in Modern Financial Advice

Investments December 7, 2025

Financial advisers face a growing challenge: how to integrate technology without losing the human connection that clients value most. With the rise of AI, automation, and digital tools, the financial services landscape is shifting, yet the need for empathy and personalized guidance remains central.

The Financial Conduct Authority (FCA) emphasizes the importance of a trusted, thriving market that spans full financial advice, simplified advice, targeted support, and guidance.

Targeted Support for Better Financial Decisions

Targeted support is emerging as a key method to help consumers make informed choices at critical points in their financial lives. This approach aims to assist people who may be vulnerable to poor outcomes, such as:

1. Drawing down pensions unsustainably
2. Not saving enough for retirement
3. Holding excessive cash in current accounts

Freepik | Financial advisers must bridge the gap between AI tools and valued human guidance.

A consultation by the FCA revealed that many individuals over 45 lack a clear plan for pension withdrawals. Approximately 75% either had no strategy for decumulation or were unaware that a choice needed to be made. Targeted support allows firms to identify these situations and offer tailored suggestions to groups facing similar financial circumstances.

Caroline Simmons, Chief Investment Officer at Quilter Cheviot, explains:

“Targeted support should be seen as part of a continuum: from guidance to targeted support to simplified advice to full advice. For underserved consumers, it may create pathways to full advice, especially as personal circumstances become complex. For high-net-worth or complex cases, bespoke strategies remain vital, particularly around drawdown and investment structure.”

AI as a Complement, Not a Replacement

While not all advisers will adopt targeted support models, the industry increasingly relies on automation. Technology can process data, model scenarios, and flag gaps, but human insight remains essential. Mark Locke, Managing Director of Communications at the Lang Cat, highlights this distinction:

“Technology should be the scaffolding, not the structure. Digital tools can gather data and present projections, but only a human adviser can interpret what those numbers mean in a client’s life. Two clients may appear identical on a spreadsheet, yet one might be supporting a child through college while the other plans early retirement. Algorithms cannot weigh competing priorities or sense emotional pressure.”

AI can streamline administrative tasks, such as producing suitability reports, reviewing case files, and pre-populating notes. This frees advisers to engage in activities that require judgment, reflection, and empathy. Locke adds:

“The value lies in how advisers use the time AI saves. It can support deeper conversations, mentoring, and reflective practice. Listening, empathizing, and guiding through uncertainty remain human strengths. If automation overtakes client interaction, the profession risks losing the qualities that make advice meaningful.”

Integrating Technology with Personal Guidance

Adviser using AI financial tools for clients

Freepik | Smart technology strengthens financial advice when guided by human empathy and understanding.

The balance between automation and human insight is becoming central to effective financial advice. Digital tools offer precision, efficiency, and scalability, but understanding clients’ personal goals, emotions, and pressures demands empathy. Advisers who leverage technology while maintaining human connection can provide guidance that feels tailored, relevant, and trustworthy.

1. Technology can identify trends and model scenarios efficiently.
2. Human advisers interpret those insights in context, accounting for personal circumstances.
3. Combining these elements strengthens trust and client engagement.

Technology in financial advice is a tool, not a substitute for human expertise. While AI enhances efficiency and supports decision-making, empathy, listening, and nuanced judgment define the value of advice.

Balancing automation with personal insight ensures clients receive guidance that addresses both practical and emotional needs, building confidence in their financial futures.