AI Can ‘Absolutely’ Provide Empathy, But Will It Replace Advisers?

TL;DR: Artificial intelligence can provide empathy, with ChatGPT scoring highest in Microsoft research, but lacks the emotional intelligence and “courageous empathy” that financial advisers deliver. AI will handle rational financial projections whilst advisers become “leaders of empathy,” providing the challenge, trust, and psychological safety that complex financial situations require.

Belinda Parmar, chief executive of The Empathy Business, confirmed that large language models can absolutely provide empathy—but this doesn’t render financial advisers redundant. Whilst LLMs possess empathy capabilities, they lack the emotional intelligence depth that characterises effective financial advice.

The Empathy Bloating Problem

Microsoft research found ChatGPT to be the most empathetic LLM, yet Parmar identifies a critical limitation: AI systems can confuse empathy with sympathy and produce “empathy bloating”—constant flattery that tells users what they want to hear rather than what they need to hear.

“Being told you’re right and you’re brilliant, you don’t need that. What is much more powerful is someone saying, ‘I don’t think this is the best thing for you, this is what I’m recommending,’” Parmar explained. “You know that the adviser has got your best interests at heart, whereas with empathy bloating are we actually helping people by telling them they’re brilliant all the time?”

Courageous Empathy: The Human Advantage

The future of financial advice lies in “courageous empathy”—the ability to challenge clients constructively. Parmar emphasises: “Every financial conversation should have an element of challenge in it because otherwise, what’s the point? Every conversation [should be] about growing, whether that’s growing my mindset, growing my financial part.”

This represents a fundamental limitation of current LLMs. “The way the LLMs are being built and the algorithms, they’re not about growth, they’re about maintaining the status quo,” Parmar noted. AI systems optimise for user satisfaction and engagement, not for delivering difficult but necessary truths.

The Head, Heart, and Hands Model

Parmar’s framework for human-AI collaboration assigns distinct roles:

  • Head (AI): Intelligence and rational analysis—financial projections, calculations, and data processing far exceeding human capability
  • Heart (Adviser): Emotional intelligence and client outcomes—ensuring decisions align with client wellbeing and best interests
  • Hands (Adviser): Financial empowerment and agency—providing clients the capability and confidence to act

“Financial advisers have this unique space, AI is going to do your financial projections and do the rational side. Advisers will move from being knowledge gatekeepers to potential leaders of empathy,” Parmar explained.

Trust and Psychological Safety

Complex financial situations amplify the need for human connection. “The more complex and nuanced financial situations are, the bigger the need for empathy and trust because at the heart of empathy is trust,” Parmar stated.

She identified three essential elements clients need from advisers: trust in their recommendations, personal rapport (“I need to like you”), and confidence in their commitment to client interests. “So at the heart of [an adviser’s role] is trust and psychological safety.”

Looking Forward

Rather than viewing AI as a threat, Parmar positions it as an exciting opportunity for advisers to combine emotion with efficiency. Advisers can offload rational, computational tasks to AI systems whilst focusing on what makes them irreplaceable: building trust, delivering difficult truths, and guiding clients through emotionally complex financial decisions.

“When you’re thinking about your money, you can feel vulnerable, and that’s when we’re going to see the role of the IFA really change,” Parmar concluded. The transformation isn’t about replacement—it’s about elevating the uniquely human contributions that no algorithm can replicate.

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