How Will Artificial Intelligence Affect the Estate Planning Profession?

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How Will Artificial Intelligence Affect the Estate Planning Profession?

If you haven’t read about it by now, artificial intelligence, otherwise known as AI is drawing attention everywhere.  According to tech emergence, more than 173 startups using AI as a central part of their product or service raised a record $1.3B in funding during 2016.  Research from Ball State University found that half of American jobs are at risk for automation and one-quarter could be offshored in the coming years.


In its simplistic definition, AI is "intelligent agents" of any device that perceives its environment and takes actions that maximize its chance of success at some goal.  Colloquially, the term "artificial intelligence" is applied when a machine mimics cognitive functions that humans associate with other human minds, such as learning and problem solving.  AI is real and it may be coming to someone’s job real soon.


While this all sounds very high tech, what does it mean in the profession of estate planning?  Legal Zoom has already commoditized some aspects of estate planning.  While technology has not served estate planning much, being able to commoditize the creation of basic estate planning documents is very real.  The same argument can be used with my favorite analogy.  Technology did not serve the taxi cab industry and while it was an effective means of travel, technology soon caught up.  Uber and Lyft have all but superseded the taxi cab industry.  In New York, a taxi medallion at one-time cost $1 million dollars.  Today, you can get one for 10% of that cost.  Many taxi firms are going bankrupt as the industry is changing.  We’ve already seen the self-driving cars with electric power in the making.  Who knows what the future holds for the auto travel industry.


The same can be said for the estate planning profession.  Imagine a technology that can analyze a person’s complex situation, provide an optimal outcome for success and then prepare the corresponding legal documents for that person?  Could a situation like that be real?  Computers can now handle complex calculations. What’s stopping them from analyzing the best way to prepare and pass on someone’s estate?  Unless the estate is challenged in probate, would those documents suffice to protect and transfer someone’s estate?  AI does not have to be accepted by the professional to work, if the consumer accepts it, then it will succeed.  Legal Zoom has been sued many times for unlawful practices but the site is still up and had a valuation of $425 Million in 2104, when the private equity firm, Permira, acquired more than $200 million of the web-based legal services existing equity.  Legal Zoom is accepted by consumers as a viable option to inexpensive and boiler plate legal document preparation.


While you are reading this, you may think that consumers still want the human touch. Possibly so, but during an age of technology, wouldn’t it be prudent to be technologically savvy in an era where it is relevant?  The next generation of planning clients WILL expect technology.  Will they expect to be served during their entire process by a machine?  The excuse that clients are older and still don’t use technology is now moot.  Individuals over the age of 55 are very tech savvy and believe they must adopt it in order to get by today. Who would have ever thought that sales people would be replaced by machines.  I guess you would have to ask the sales people who have been replaced by the AI sales team at Conversica.The reality of this discussion isn’t about AI taking over the practice, but more importantly becoming a necessity instead of a commodity.  If your practice is merely producing documents you may want to reconsider how you serve your clients.  If you think your clients come to you for your expertise well, there are many professionals who have expertise, but so do machines.  If you get referrals from financial advisors, their business is becoming commoditized to.  There is so much technology in the financial advisor world today that it is hard to sort out.  Heck, if estate planning can be commoditized, maybe financial advisors will just use a machine to produce documents for their clients instead of referring business out.


It is a serious topic to consider.  Those who choose to ignore it will be passed by, it is only a matter of time.  Who knows, maybe the first machine to estate plan with individuals is already in the making.  While it is not our opinion if AI will enter the practice, the fact that AI has made its entrance is real.  If clients can get expertise in the form of a machine for half the cost, it will be considered.  In the absence of value and ease, the price becomes everything.

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Scott Huff – CEO Yourefolio

Of course they matter…depending on your perception