When deciding on what technology to adopt for their practices, financial advisors have always had the choice between building their own tools or buying 'off-the-shelf' third-party solutions. But in practice, for the vast majority of firms, it's historically almost always been better to "buy" than to "build": Because the upfront cost of building a piece of software is so high (which third-party providers are able to spread across many different users), it might take many years for a firm that builds its own software to realize enough savings to recoup the initial investment – at which point it might be time to replace or overhaul the software and start the process over again.
But in the past several years, the cost of building and developing new software has decreased thanks to the emergence of AI-powered 'vibe coding' tools, which can convert plain-English instructions from users into the code needed to make the software work – greatly reducing the need to hire a human developer to manually code the whole project (and in many cases allowing developers to work faster and more cheaply). Which in turn has changed the math about when it makes sense to build versus buy technology: Where it once might have only made sense for firms with 20+ advisors to build custom technology, many smaller firms and even solo advisors now can (and do) create their own tools. The lowering of barriers to self-built technology has led to many predictions that advisors will overwhelmingly drop their third-party software licenses and turn to 'homegrown' tools, causing mass disruption and consolidation of existing AdvisorTech providers.
While some advisors are embracing the possibilities of vibe coding and building their own tools, the evidence so far shows that third-party software providers as a whole are under no threat from vibe coded alternatives. Because even among advisors who are diving into tools like Claude to build their own technology, the vast majority are creating software that supplements, rather than replaces, their existing third-party solutions. For example, advisors in vibe coding communities like Builder FP have primarily focused on either tools that can help integrate reporting outputs from their existing software platforms into a single streamlined deliverable, or that are specific to the needs of their own niche clientele. Which makes sense given that most advisors are already fairly happy with the software that they use, and there's little reason to go through the effort of building custom software from scratch (even with the help of AI) to replace something that's already working well!
And in fact, the proliferation of AI coding tools will more likely lead to an increase, not a decrease, in the number of third-party technology solutions available. Entrepreneurs can use those same vibe coding tools to develop technology at a quicker pace and in areas that might not have been economically viable in the past (including niche areas like real estate and long-term care planning as well as categories like CRM and tax planning where there is well-established competition). Advisors may soon be able to find more tools to fill in the gaps between their existing technology – making the already crowded technology landscape even more so, and forcing advisors to spend even more time evaluating and managing their technology.
The key point is that although AI vibe coding might lower the bar for advisors to build their own tools, the reality is that few advisors consider themselves technologists and most are instead satisfied with letting a specialized third-party provider do the work of building, developing, and distributing the software that they use (not to mention handling the finer points of things like data security that are harder to master with self-built software). And while advisors can choose to build their own tools in the specific areas that their existing software doesn't cover, the proliferation of new technology suggests that those who aren't inclined to do it themselves may be able to simply wait a little while for the right solution to appear from a third party!
