Trend Following: An Authentic View of AI’s Impact

I imagine I’m not alone in saying that my household recently held the 572^nd viewing of the movie “Frozen.” I’d very much like to “let it go” – you knew what’s coming if you know the movie – but my children say otherwise.

For a strange reason, I was newly struck by the film’s opening sequence. It shows ice harvesters cutting big blocks from a frozen lake, which causes echoing cracks to slice through the crisp air. The scene highlights both the beauty and danger of winter.

As a native of the South, any winter that involves months of frigid cold and frozen water is strange to me in general. But the root of my captivation upon this viewing was due to noticing parallels to what artificial intelligence is highlighting for financial advisors right now: both beautiful (enhancing planning, communication, and scenario-modeling functions) and dangerous (potentially causing some to go extinct).

The AUM-Fee Structure Built An Industry

The AUM fee model has worked for advisors for a long time. Now, the model many advisors have relied on may be showing signs of cracks due to the emergence of AI. Garrison’s work with advisors indicates that the cracks are not due to clients suddenly hating their advisors or the markets collapsing, but because technology and increased information are exposing what was always there: a widening gap between what clients pay and what it actually costs to deliver increasingly commoditized services.

That’s not hype. It’s the structural shift outlined in a new white paper I co-authored with Mike Garrison, a business coach and best-selling author. In “The Fee Opacity Thesis,” we outline our thoughts about:

• The advisory industry isn’t facing generic disruption
• Instead, it is splitting in two: Scale Practices (tech-forward firms serving hundreds of households efficiently with transparent, lower-margin pricing) and Complexity Practices (relationship-first advisors tackling the high-stakes, multi-generational problems that AI can’t solve)
• There could be a dangerous middle ground facing advisors who are charging premium fees for services that technology and scale players are making cheaper and clearer by the day

The Missing Mechanism — How a Scale or Complexity Practice Actually Gets Built

Both the Scale Practice and Complexity Practice are real and achievable. But there is a step between “deciding a practice model” and “actually operating as one” that tends to get glossed over: the advisor has to give something up first.

Most independent advisors arrived at their current model by accumulating responsibilities over time. Portfolio management, financial planning, tax coordination, client communication, compliance, onboarding — all of it lands on the same person or small team. The result is a practice that is growing, in many cases, but operationally maxed out. Every hour spent rebalancing accounts, researching positions, or explaining basic financial planning principles is an hour not spent on modeling scenarios that reveal risk or opportunity, feeding the advisor’s content marketing machine, or on a discovery call – i.e., whatever activities are appropriate for each advisor’s practice model. 

The path to Scale Practice or Complexity Practice economics runs directly through that tension. The advisors who have successfully made this transition share a common trait: they made a deliberate decision about what they would stop doing themselves.

For most practices, investment management is the highest-leverage function to outsource — not because it’s unimportant, but because it’s time-intensive, requires continuous attention, and is increasingly commoditized in the client’s perception. Despite this, roughly 78% of advisor practices are still building or managing portfolios primarily in-house, according to Cerulli Associates’ 2024 research. That figure represents an enormous amount of advisor time being spent on a function that a specialized asset manager could handle.

Instead of building an internal investment committee, continuously monitoring positions, and handling rebalances, financial advisors can plug into an institutional asset manager. The advisor retains ownership of the client relationship and planning process while the asset manager, like Blueprint Investment Partners, handles services such as portfolio implementation and ongoing risk management.

The result is often more capacity.

Why “Behavioral Coaching” Is a Fragile Defense

While behavioral coaching has long been the industry’s persuasive defense of current fee levels, this service is usually episodic, mostly valuable during crises, and increasingly replicable by AI.

An alternative is an investment process that structurally reduces the need for behavioral intervention in the first place, and is generally relevant for both the Scale Practice and Complexity Practice.

Systematic investing — sometimes called rules-based or trend-following — refers to strategies governed by a defined, repeatable set of conditions. Rather than relying on discretionary market predictions or emotionally driven decisions, systematic trend following uses repeatable rules to determine what to own, when to reduce risk, and when to reallocate capital. The investing process is explainable, consistent, and scalable.

When a client asks, “Why did you make this move?” the answer is not, “Because I believe the market is heading in this direction” — a claim that’s impossible to verify. The answer is, “Because the process triggered a signal based on these observable conditions” — auditable and consistent. That distinction matters more as clients, and their heirs, become more sophisticated about asking the question.

I’ve personally seen the ability of systematic investing to transform client relationships and an advisor’s practice, as I’ve been applying these processes to portfolios since 2003. It’s the foundation upon which Blueprint Investment Partners was launched in 2013.  

Responding to the Next Generation’s Priorities

Systematic investing also aligns philosophically with the transparency demands of many younger clients, as well as the upcoming heirs of older clients.

Frankly, many investors are growing tired of financial explanations that sound like they’re coming from Doctor Strange, who was famously known for witnessing 14,000,605 possible futures during the “Avengers: Infinity War” movie. Investors increasingly desire reliability of process over seemingly infinite prophecies and potential outcomes, in my view. A process-driven strategy can clearly explain what it does, why positions change, and how risk is managed.

Speaking of clear explanations and transparency: One of the core arguments of “The Fee Opacity Thesis” is that bundled advisory pricing becomes vulnerable when clients cannot distinguish between investment management, planning, behavioral coaching, and operational services. Financial advisors who outsource the asset management function can create a much clearer division of labor. Clients understand there is a dedicated, institutional investment management process operating in the background while the advisor focuses on planning, coordination, and relationship management.

The wealth transfer window creates urgency due to shifting generational expectations. As $79 trillion moves from boomers to younger generations over the next 15 years, 70-90% of heirs change advisors — often to lower-fee, digital-native platforms. Millennial and Gen Z heirs are unlikely to accept bundled percentage-based pricing as a default.

Advisors who have already made their fees and value delivery transparent will be better insulated. Those relying on fee invisibility will be more vulnerable.

Ultimately, the future described in “The Fee Opacity Thesis” is not anti-advisor. It is anti-undifferentiated financial services and advice. Advisors who clearly define their role, embrace transparency, and intentionally build either a Scale Practice or Complexity Practice are likely to emerge stronger.

Sourcing: Cerulli Associates, “2024 U.S. Advisor Metrics: 78% of advisor practices build or manage portfolios primarily in-house;” Fortune (July 2025), “$124  trillion through 2048, $79 trillion from baby boomers, $46 trillion to millennials;” and Mike Garrison synthesis of industry research on heir retention rates (2026)