The number of advice firms using AI has more than doubled over the past 12 months, rising from 29 per cent to 60 per cent, according to the lang cat.
The findings come from the latest State of the Advice Nation report, which shows AI use is especially common among larger firms with over £1bn AUM, where usage rises to 88 per cent.
Meanwhile, around 81 per cent of advisers ranked AI as amongst the most important areas of change in the industry.
It also highlighted the barriers to entry for advisers in AI adoption, with around 46 per cent citing trust in outputs as being the primary issue and 40 per cent pointed to compliance and regulatory concerns.
The research suggests that AI tools are accessible and improving quickly but unclear regulation means firms lack agreed standards for use, which reduces confidence in adopting them.
It also found that firms see AI as an opportunity rather than a threat. But this is less so when it comes to AI replacing human judgement with the fear being that it would reduce skilled roles or limit oversight.
Respondents gave AI-generated recommendations in client-facing advice an average comfort score of 4.1 out of 10, reflecting general caution. Smaller firms with under £50m AUM scored 3.5, while larger firms with £250–£500m AUM showed greater confidence at 6.5.
Advisers still view AI as a key technology with around 24 per cent, saying it made the biggest difference to their business last year.
the lang cat insight director Steve Nelson says: “AI discourse is everywhere and with SOTAN, we wanted to make sure we understood how it was affecting the advice sector. What is clear is there is an appetite and an application for its use within advice firms, with usage doubling from last year. Firms are finding it useful for administration, meeting notes, data handling and report drafting. However, there is still a reticence about using it for client-facing tasks or for anything that’d lessen the involvement of human judgement.
“Where we are seeing nervousness around adoption, despite AI being available, affordable and increasingly capable, is in a lack of regulatory frameworks to ease adviser’s minds where there are understandable concerns around regulation and compliance. Firms lack shared norms around acceptable use and if there was more direction in this area, this may lead to greater levels of comfort in adoption.
“It is also worth noting that over a third registered that they were uncomfortable on some level with data security when using AI in financial advice. As much as we’re seeing the welcoming of innovation, it’s important that development doesn’t come at the expense of other critical elements like data security. This is obviously all moving at a fast pace, but it certainly looks like AI in one way, shape or form will continue to play a role in advice.”