Automation, niche focus and smarter regulation will decide which advisory practices scale and which stall, writes Brian Kovack
The gap between advisors who build scalable practices and those who stagnate may continue to exist, as it has been observed in our industry. Historically, it was commonly believed that the advisor with the most effective investment process would have a competitive edge. That is no longer true. The advisors who strive to build genuinely scalable businesses while maintaining a deeply personal client experience may have a competitive edge in the coming decade.
That shift is already showing up in how clients define a life well lived. Coming out of the pandemic, people did not simply return to their old spending habits. Many reassessed their priorities after years of lockdowns, health scares and social isolation, and the data since has pointed to a steady rise in spending on travel, dining, wellness and other experience-driven priorities. For advisors, that matters because it resets what clients are actually saving for. It also means an advisor’s process, not just their portfolio construction, is becoming the real competitive advantage. Firms that specialize are already pulling ahead of generalists, whose value proposition looks less differentiated by the year, a pattern that shows up clearly in how one advisor built a specialized practice around a single client niche.
Removing the ceiling that complexity creates
Having spent years on the technology side of advisor support, I have observed various tools and strategies across firms, including a larger reporting suite and a more advanced planning tool. It is reducing manual work through integration and automation. Every advisor survey I have reviewed comes back to the same complaint: advisors want to spend their time advising clients, not acting as data entry clerks or process coordinators. Eliminate rekeying, automate routine workflows and give advisors real-time visibility into where their requests stand, and you hand meaningful hours back to every practice every week. Investing in technology can potentially lead to productivity gains, and it has often been associated with measurable returns. Advisors who cannot systematize their business typically hit a ceiling where every new client adds more complexity than revenue.
“The winners will not simply be the advisors with the best investment process. They will be the ones who run scalable businesses while maintaining a deeply personal client experience.”
AI can potentially help advisors mange their time more efficiently
Over the next five years, I anticipate that artificial intelligence could potentially streamline some of the administrative, research and coordination tasks that currently compete with time in front of clients. Advisors who embrace it will serve more people, deliver more personalized advice and run leaner practices, a shift already visible in how artificial intelligence is freeing advisors from administrative work across the industry. The financial advisor of the future aims to spend less time processing information and more time assisting clients in making informed decisions, supported by AI-powered insights and workflows. In short, AI should make advisors more proactive, more efficient and more personally connected to clients than they have ever been.
Where regulators are getting the balance right, and wrong
Having served two terms on the Financial Industry Regulatory Authority Board of Governors while also running an independent firm, my view is that regulators generally have the right objective but do not always get the execution right. The best regulation is technology-neutral and risk-based. If a firm can use technology to deliver better supervision, cleaner records, faster compliance and a better client experience, regulators should encourage it. FINRA has been moving in that direction, including through FINRA’s 2026 regulatory agenda targeting generative AI and cyber fraud risks. Where we can still do better is around the cost and uncertainty of adoption. A smaller independent firm should not need a large compliance department just to determine whether a new tool is permissible. Supervision, recordkeeping, accuracy, privacy and fair dealing are the right principles, but firms need enough practical guidance to tell a manageable risk from a reason not to innovate. FINRA itself has recognized that most firms are using generative AI today for efficiency, not client-facing advice, largely for summarization and information extraction. Ultimately, regulators should not regulate the technology. They should regulate the outcome and the risk. If an advisor can automate a repetitive administrative task while preserving supervision, auditability and client protection, that should be viewed as a win, not a liability.
The practices that come out ahead over the next decade will not be the ones that simply added more clients or more tools. They strive to maintain high standards in both scalability and investment performance, often utilizing automation and AI in support of tasks that human advisors are typically responsible for. They work within a regulatory environment that aims at recognizing and rewarding approaches that align with these standards.
Disclaimer:
Kovack Financial Network is a registered DBA name of Kovack Financial, LLC. Securities offered through Kovack Securities, Inc. Member FINRA/SIPC. 6451 North Federal Highway, Suite 1201, Fort Lauderdale, FL 33308, (954) 782-4771. Investment advisory services offered through Kovack Advisors, Inc. Kovack Securities and Kovack Advisors are subsidiaries of Kovack Financial, LLC.