AI-Generated Applications Force Finance Chiefs to Rethink Hiring Signals as Cover Letters Lose Value

The cover letter, a hiring staple since Leonardo da Vinci pitched himself to the Duke of Milan in 1482, is rapidly losing its utility as a signal of candidate quality—and generative AI is the culprit, according to new research from Wharton.

As finance departments race to fill specialized roles in an increasingly competitive talent market, the traditional cover letter has become what Wharton professor Judd Kessler calls a fundamentally compromised screening tool. The reason: candidates can now generate polished, personalized cover letters in seconds using AI tools, effectively destroying the document's core function as a costly signal of genuine interest and effort.

The implications for CFOs and finance leaders are immediate. Cover letters historically served two purposes in the hiring process: demonstrating writing ability and signaling authentic interest through the time investment required to craft a thoughtful application. Generative AI has obliterated the second function entirely. When a candidate can produce a compelling, company-specific cover letter in under a minute, the document no longer distinguishes between someone genuinely excited about a financial analyst role and someone mass-applying to 50 positions before lunch.

Kessler, whose research focuses on labor market signaling mechanisms, argues that firms need to identify alternative signals that AI cannot easily replicate. The challenge is particularly acute in finance functions, where hiring managers have long relied on cover letters to assess communication skills—critical for roles requiring client interaction, board presentations, or cross-functional collaboration.

The shift creates a paradox for job seekers as well. Finance professionals who refuse to use AI for cover letters now face a competitive disadvantage against candidates who do, yet using AI eliminates the very signal the cover letter was meant to send. The result is a classic arms race: everyone uses AI to keep pace, and the informational value of the exercise collapses to zero.

For finance leaders managing hiring processes, the practical question becomes: what replaces the cover letter? Kessler's analysis suggests firms should pivot toward signals that remain costly to fake even with AI assistance. These might include work samples, case studies with specific deliverables, or structured interviews designed to assess problem-solving in real time. Some finance departments are already experimenting with brief video introductions or requiring candidates to complete short analytical exercises that demonstrate actual skills rather than writing polish.

The broader pattern here is familiar to anyone tracking AI's impact on corporate functions: tools that seemed stable for centuries can become obsolete in months. The cover letter survived the typewriter, the personal computer, and email. It may not survive ChatGPT.

What makes this shift particularly notable is the speed. Kessler's research, published February 24, 2026, comes less than four years after generative AI tools became widely accessible. The hiring infrastructure built around cover letters—applicant tracking systems that parse them, rubrics that score them, entire consulting industries that teach candidates how to write them—now faces fundamental questions about continued relevance.

For CFOs, the immediate action item is reviewing whether cover letters still provide useful signal in their hiring processes, or whether they've become mere theater. If the latter, the challenge is identifying what costly, hard-to-fake signals should replace them—before competitors figure it out first.