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Action Learning Associates

AI Adoption in Family Business: Balancing Trust and Tech

Summary: In a time of rapid AI acceleration, family business leaders must balance innovation with intergenerational trust. Here are six key risks—from data privacy to ethical forecasting—and practical AI applications already transforming client engagement. Drawing on examples from the AFHE Spring Conference last week, and my client case studies. AI must support, not replace, human relationships. For family advisors, innovation is no longer optional—it’s expected.

Artificial intelligence (AI) dominates many conversations.   For some people, AI is a catalyst for innovation. For others, AI is a threat cloaked in code.

The Technology Adoption Curve model describes how tools such as AI have been adopted by Innovators (2.5%), Early Adopters (13.5%), Early Majority (34%), and Late Majority (34%).  That model begs my question: How can we measure our rate of AI adoption in Family Business?

Many younger people are more digitally trusting than elders and owners.  Some multi-family offices, RIAs, and consulting firms are designed to serve Millennial and Gen Z inheritors.  Advisors know that family business leaders must not only preserve capital—they must also preserve trust across generations.   

At the recent Attorneys for Family-Held Enterprises (AFHE) Spring Conference, I asked advisors to rate their own AI usage and fears on a scale from 1 to 10. The responses painted a familiar picture of curiosity mixed with concern.  One advisor quipped, “I’ve used ChatGPT to write emails, but I still don’t trust it with anything sensitive.”  I shared how to create a customized GPT that protects sensitive client information and does not share data with large language models (LLMs).   Another enthusiastic advisor described AI adoption as “table stakes” for maintaining relationships with Next-Gen clients, who expect personalized planning, 24/7 access, and digital transparencyHe is worried about retaining AUM from younger owners.

That tension—between confidentiality and innovation—describes the risks, challenges and need for change.  Here are some practical applications based on my AI consulting solutions that readers can implement.

Six Risks for Family Business Leaders

  1. Data Privacy & Security:   All leaders must access and protect sensitive financial and family data.  Data breaches aren’t just costly—they’re unacceptable.  Every trusted advisor in every business sector knows that our fiduciary demands require closed access, digital firewalls, and the most robust multi-factor authentication security protocols.  I have heard stories of repeated multi-million-dollar attacks.  Countless Family Offices and business leaders are targets for cybercriminals because they have access to wealth.  We also know that inconsistent human behavior is a poor substitute for those AI-driven criminals. 
  2. Over-Reliance:  Replacing human emotional intelligence with algorithms may feel good because of the dopamine surge, but it erodes relational trust.  I’ve heard clients say, “I interact more with my GPT than with people!”  Psychologists and clinicians have studied the impact of digital addiction for decades now.   We know that over-reliance on digital resources is a factor in anxiety, depression, sleep problems, obesity, neck and eye strain and memory loss.  In short, AI is not a substitute for positive human interactions.
  3. Ethical Predictive Use:   There are tools like Lex Machina and Bloomberg Law that can forecast divorce or succession risk.  But should they?   AI-driven actuaries and healthcare data sets can now predict lifespan and health risks.  But should they?  There is no universal acceptance of the ethical boundaries that can be recommended to protect individual rights.  There is no acceptance that any government, tech company, or international community has defined ethical uses of AI.  The implications for insurance companies, health care providers, philanthropy and estate planning are rarely discussed.   We need to develop ethical boundaries for AI use.
  4. Regulatory Uncertainty:   As AI applications accelerate, the tools always get faster, cheaper and more accurate.  Some regulatory agencies, including the SEC and FINRA, have developed guidelines.  But the bottom line is that AI applications are designed to learn from themselves, to improve efficiency in microseconds.  By their design “black-box AI tools” are secret.  They lack transparency and defy regulatory compliance.  We need to develop regulatory AI guidelines that resist bias and protect individual confidentiality. 
  5. Resistance to Change:  In response to countless threats, humans have always adapted to evolve slowly.  We always protect our assets.  Some are inclined to say, “Yes, of course I embrace change.  You go first.”  Many solo advisors admit lacking the bandwidth to vet new AI tools or automate workflows.  One of my clients said, “I know I need AI scanning tools like Optical Character Recognition (OCR) someday- but certainly not during tax season!”   Thankfully, anyone can now use AI to design business templates for any possible change.
  6. Talent Gaps:  We all make mistakes when we “don’t know what we don’t know.”  Did you know that there are some key competencies that are uniquely human and will never be replaced by AI?  Those competencies include resilience, humility, empathy, curiosity and learning agility.   When we identify how to assess and develop those competencies, then we redefine career and talent gaps.   Without doubt, AI is here to stay.  How we use AI will redesign all family business consulting.  

Consider the following examples.

Using AI to Re-Design Family Business Consulting.

  1. Adopt AI-tools that scaffold learning, like micro-coaching sessions, or simulations.  One example is my AI-assisted communication coaching platform that provides confidential analysis and feedback using customized role plays.  Imagine selecting a role play like “sibling conflict” or “succession planning.”   Then select an avatar based on the interactions you anticipate or skills you need to develop (e.g.,  blunt,  skeptical, friendly, etc).   Then record your interactive learning.  Study the confidential analysis, feedback, and transcript.   Practice again and again.   We know that deliberate mastery accelerates skill development.   When I did a demo with an audience last week, they said, “This is incredible technology, and gets at communication– the heart of all conflict problems.”  Those individual, recorded sessions are GPDR and SOC2 compliant, and have been embraced by Korn Ferry, Spencer Stuart and Google.  Any presentation, interview or recoded content can be uploaded for analysis and feedback.   Imagine improving your communication skills with immediate feedback before meeting with a demanding sales manager.  One tech company found a 24% increase in sales when they used this platform.   Another large company trained 15,000 people in weeks, with a 97% training completion rate and high engagement scores.  See www.JITCoach.com or ask for a demo.
  • Use AI to record meetings summaries, create action plans and task lists.   With permission from all participants, many host platforms (e.g.,  Zoom and Microsoft Teams) can provide summaries for any number of participants.  I have hosted webinars where AI Summaries (e.g., Otter and Fireflies) outnumber the number of human participants.  The value for busy professionals is access to the webinar content when they may be double-or-triple-booked.  The value to me as the webinar host is high quality, consistent distribution of my key points within minutes to those who want that summary.
  • Use AI summaries as a personal development tool.  Self-coaching with “mirror, mirror on the wall” is not useful.  However, recording a private session on your zoom screen is an opportunity for assessment and development.  That recording can be stored on a password-protected thumb drive for security.  If uploaded into a private YouTube link, you can then click a button and see your transcript.  Any GPT can then edit your text and suggest changes.  If you want to be more assertive, the AI will provide a revised text.  If you want to be more emotionally vulnerable, AI will provide another revised text.  We have more access to behavioral feedback than ever before in human history. 
  • One of the most powerful developments is the ability to create customized AI systems. I’ve built what some call a “closed chat GPT”—an AI trained on my books, dissertation, research papers, blog posts, and website content.  I call it “Gray Matters” and share it with my clients.  When asked, “How would Doug respond to this situation?” it provides evidence-based answers drawn from that data set. Crucially, you can configure these closed systems to maintain confidentiality, which prevents your data from being shared with large language models.

Small business leaders can leverage this same technology. If you need to maintain client confidentiality for legal reasons but want to provide unique value to those clients, a closed AI system offers a perfect solution. This fact explains why there are so many chatbots on company websites—they’re cost-efficient and can provide consistent service 24/7.  Do you need to invest in Schwab or Fidelity or Vanguard?  Then you need to interact with bots before humans.

  • Use multiple AI tools to develop expertise.  If I ask Chat GPT “How can I accelerate succession planning for a family business?”  It will provide pages of information.  If I’m confused, I can always ask “Tell me more…” and it will do so.   But the quality of my prompt determines the quality of the response.   So, if I copy that first response and paste it into Grok I can then ask, “Analyze this document and suggest improvements.”  Then I can take the second response and paste it into Gemini to ask, “What am I missing?” and now I have responses from three data sources.  Like asking three colleague or three interns for their perspectives, the value of that final result is 3x better.  Consultants have always sought opinions from multiple sources.  When you add AI to your research the quality may be surprisingly good.  

Case in Point: A Next-Gen Shift

Consider a second-generation family CEO in Nashville, TN, who introduced AI-generated financial dashboards to quarterly family meetings.  The elder cousins were initially skeptical.  They embraced the dashboards—not because of the tech, but because the founder emphasized how these tools would reduce conflict and increase transparency.

The result? Fewer side meetings, more collaborative planning, and, surprisingly, more laughter around the kitchen table and the board room table.

Takeaways for Family Business Leaders

  1. Start small: Try AI-generated summaries (e.g., from Zoom or Microsoft Teams, with client permission).   Edit them and share discretely.  Select an AI tool (e.g., Chat GPT, Claude, Gemini, Grok) for searches.  Save it in your task bar so that you use it frequently.  Edit results from one AI tool to another, then select the tool that best serves your needs.
  2. Engage your team:  Create internal cross-functional task forces with IT, compliance, and client experience leaders.   Focus on solving client problems, rather than cool new solutions.
  3. Educate clients: Share how AI supports (not replaces) your professional counsel.  Solicit feedback on topics or services required by your clients.  Automate those services and continue soliciting market feedback.
  4. Ask the trust question: “How does this AI tool deepen our trusting relationship?”  Clients stop engaging advisors when they perceive limited value.  AI tools can add significant value when used with care.

Final Word: Innovation is Now an Expectation

As fiduciaries, educators, and ethical leaders, family business advisors must balance technical advancement with emotional insight. Clients trust advisors who care—more than those who depend on AI. 


Doug Gray, PhD is the CEO of Action Learning Associates, author of The Success Playbook for Next Gen Family Business Leaders (2024) and creator of JITCoach.com. He specializes in leadership development, AI coaching, and succession planning in family-owned enterprises.