AI use doubles among advisers but reluctance around client-facing adoption remains

The number of advice firms using artificial intelligence (AI) has more than doubled over the past 12 months, according to lang cat research findings.

The consultancy’s latest State of the Advice Nation (SOTAN) report shows that the proportion of advisers using AI rose from 29% in last year's report to 60% this year.

AI use is particularly ubiquitous amongst larger firms (over £1bn AUM) where usage shoots up to 88%.

Advice professionals ranked AI as amongst the most important areas of change in the industry with 81% saying that the technology was more important to their businesses in 2025.

Barriers for entry

The lang cat also investigated where barriers for entry exist for advisers in terms of AI adoption.

46% cited trust in outputs as being the primary issue and 40% pointed to compliance and regulatory concerns.

Despite AI tools being “available, affordable and increasingly capable” it was suggested a lack of regulation may mean “firms lack shared norms around acceptable use” that they would need to have more confidence in adoption.

Client-facing AI anxiety

Firms are not generally viewing AI as a threat, but an opportunity. However, positive views of AI tend to shift when considering it replacing judgement, reducing the need for skilled individuals or general oversight.

When asked about comfort levels with AI-generated recommendations in client-facing advice, respondents scored an average 4.1 out of ten, indicating a general caution. This is also a point of difference when it comes to smaller firms and larger firms with those with AUM under £50m scoring a 3.5 and larger firms (AUM £250-£500m) scoring higher confidence levels at 6.5.

Regardless, AI is still being viewed as a key technology by advice professionals. Just under a quarter (24%) see it as the tech that made the biggest difference to their business last year, garnering the second highest share of the vote behind cashflow modelling at 26%.

Steve Nelson, insight director at the lang cat, said: “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.”