The AI challenge facing financial services (and how to turn it into an advantage)

Artificial intelligence is rapidly reshaping the role of financial advisers, creating both significant disruption and opportunity across the sector. Tasks that once took hours can now be completed in seconds, while clients are increasingly turning to digital tools for analysis and insights, sometimes cutting human advisers out entirely. Melanie Franklin, CEO of Capability for Change, explores why AI represents the single biggest challenge facing financial advisers today and how leaders can turn this development into an advantage.

The impact of AI on financial services

I work closely with institutions across banking, wealth management, and insurance as they navigate complex transformation and see first-hand the transformative effect AI is having on the sector.

Our 2025 Capability for Change report found that nearly 40% of financial services leaders say AI has already reshaped at least one core process in their organisation. This is not a future scenario; it is happening now and its redefining how advisers offer value to clients.

Whilst industry leaders will be used to a level of constant updates within the sector, including regulatory updates and other digital advancement, the pace and scale of change prompted by AI are quite extraordinary.

AI can process vast volumes of data, identify patterns that are not immediately visible, automate repetitive analytical work, and even offer basic recommendations. These shifts are challenging traditional working models. Roles are evolving, and advisers must consider what makes their contribution uniquely human. In practice, this means embracing AI not as a replacement for professional judgement, but as a tool that frees up advisers’ time so they can focus on higher-value work that clients truly appreciate.

Leading in an AI-driven world

As a result, the skills needed to be a successful leader in the industry are shifting too. Our research shows that over 70% of senior managers now view adaptability and continuous learning as essential to effective leadership in financial services.

Not only this, but leaders must be able to get teams on board. This means weaving multiple, simultaneous changes into a clear vision and shared goal that teams can buy into.

In short, the hallmark of effective leadership is no longer just the ability to manage a team of great advisers. Instead, leaders must be able to adapt quickly, experiment responsibly, and communicate a clear direction.

Understanding leadership hesitation

Despite the opportunities presented by AI, some leaders are hesitant. Our 2025 report found that 18% of senior managers see leading AI-driven transformation as a reputational risk, and these concerns are understandable.

In my experience, the most pressing personal fears are often caused by one of two things. The first is around values. Advisers worry that relying on AI might compromise professional judgement or ethical standards. The second is more existential. Leaders question whether embracing AI could automate elements of their own role and challenge their relevance.

In addition, AI also risks accelerating the gap between those who lead work and those who carry it out. Many teams on the ground are using AI tools daily, rapidly adapting how they work and developing hands‑on expertise. Leaders, however, are often one step removed from this experimentation. As a result, teams can quickly become the subject matter experts, creating an uncomfortable dynamic in which senior managers and directors feel less confident in the technical detail than the people they manage.

This creates a potential threat to credibility. When senior figures do not engage with AI themselves, it can send an unintended message: do as I say, not as I do. This disconnect undermines trust and makes it harder to motivate and engage teams during periods of rapid change. Our report highlights that role‑modelling, a key driver of influence, has already declined across many organisations, despite being essential to building confidence in transformation.

Compounding this challenge, the lifespan of skills in financial services is shrinking. AI is accelerating the pace at which technical knowledge becomes outdated, meaning skills that once remained relevant for years now require continuous updating simply to keep pace. Leaders who avoid experimenting with AI risk falling behind their teams and, in doing so, weakening both their relevance and their ability to lead through change effectively.

The stakes of embracing AI

Whilst these concerns are valid, failing to act poses a far greater risk. Firms that adopt AI strategically gain efficiency, deeper client insights, and the ability to elevate their human expertise. Those who do not risk losing influence, credibility, and relevance in an increasingly competitive market.

But perhaps more inspiring than the risks of avoiding AI are the brand new opportunities that embracing it can create. It allows advisers to spend more time on what matters most: building meaningful client relationships, interpreting complex situations, and guiding clients through uncertainty. If routine analytical tasks are automated, leaders can refocus on the aspects of their role they find most rewarding, whether that is mentoring, delivering financial education, or deepening client engagement.

From threat to opportunity: actionable steps for leaders

When approaching AI adoption, I advise leaders to take a step back and reflect on their professional value. What parts of your work have the greatest impact for clients? Where would you like to invest the time gained through AI efficiencies?

Thinking in this way shifts the perspective from defensive to strategic. These changes are inevitable, so why not embrace the benefits they bring? Viewing AI as an enabler rather than a threat allows leaders to reclaim time for meaningful, high-impact work and to help their teams do the same.

Leadership: the differentiator in AI adoption

AI will continue to evolve, and technology alone will not define success. How we respond to it does. Our report highlights that 62% of organisations see leadership capability, rather than access to technology, as the key differentiator in AI adoption. Leaders who step confidently into ambiguity, communicate a clear vision, and integrate AI thoughtfully will strengthen both their relevance and credibility.

The opportunity is clear: embrace AI, lead visibly, and guide your teams to thrive in a changing world. Those who do so will not only navigate disruption, they will elevate the human value of financial advice in ways that clients notice and appreciate.