Artificial intelligence may be one of the most important general-purpose technologies of our lifetime, but that does not mean every company, strategy, or investment tied to the theme is priced appropriately.
In this article, Joe Halpern explores how advisors can help clients separate the long-term potential of AI from the short-term risks created by exuberant valuations, concentrated portfolios, and emotionally driven decision-making.
- Separate the Technology from the Trade — AI can be transformative while individual investments connected to the theme may still be overvalued. Advisors should help clients understand that believing in the technology does not require ignoring price.
- Use Valuation to Calibrate Risk, Not Time the Market — Expensive markets can continue rising, and valuation alone is not a reliable short-term timing tool. Instead, advisors can use it to review concentration, liquidity needs, diversification, and downside tolerance.
- Own the Deployment Phase, Not Just the Frenzy — The biggest long-term beneficiaries of AI may extend far beyond chipmakers and model developers to industries such as healthcare, financial services, manufacturing, energy, logistics, and education.
- Prepare Clients for Volatility Before It Arrives — Advisors should set expectations early, explaining that major innovation cycles often include painful corrections and ensuring portfolios are built to withstand them.
- Connect Every Allocation to the Client’s Plan — Clients are more likely to remain disciplined when they understand how each part of the portfolio supports retirement, liquidity, tax management, estate planning, philanthropy, and long-term goals.
The advisor’s role is not to predict the next market move or dismiss the potential of AI. It is to help clients participate in long-term innovation without becoming overexposed to short-term excitement.
For a deeper dive into this topic, read the full article on Advisor Perspectives
