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How Artificial Intelligence Might Help Advisors

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From a business perspective, I love August. I understand for many it is a time for vacation, last-minute activities before the kids go back to school and, hopefully, relaxation, but it’s also a nice opportunity to work “on” your business instead of always working “in” your business. When this involves new technology objectives, you might simply need to get away in order to truly conduct the best evaluation. This is certainly the case when the idea is unique and perhaps not as familiar, which brings us to this month’s discussion.

You probably have already experienced or at least heard about machine learning, behavioral analytics and artificial intelligence (AI). This cutting-edge technology is definitely starting to have its impact in a number of industries and professions. A simple example is when you get into your car after work and your smartphone automatically alerts you to the traffic conditions and the time it will take to drive home. It is unlikely that you specifically asked for this information, but the device “learned” that this was probably important information at that specific time given your previous activity and history.

(Related: Where Are Advisors Spending Their Tech Dollars?)

At the recent Pershing INSITE Conference in San Diego, I was part of a panel that discussed how this emerging technology can and will be used to benefit advisors and their firms. Businesses such as custodians, product companies, fintech companies and research providers will offer or incorporate AI technology to improve their products and services. AI technology can be a complex and even confusing topic, which makes it important to connect how we operate today with potential benefits.

For our profession, which involves extensive amounts of data, there is a lot that we can do to leverage various types of AI technology. Today, a significant number of the tasks that advisors do involve pulling various reports: asset allocation, performance, cost basis, tax and financial planning. Some of these reports are run in isolation, others combine data from different sources, and some are simply ad hoc or on-demand reports.

Furthermore, with a majority of these reports, the user is directly driving the process and implementation. As a profession, we have made great strides with the reporting options available, but AI technology can take it to a whole new level.

Similar to the traffic example previously described, one main goal for using AI is to help your firm anticipate and meet a need before it is even raised by your client. Think about it: Your firm has a great vantage point into the activity of your clients with their financial affairs.

Some of this is factual information, some involves disparate sources, and some is highly correlated with various life stages. The potential of AI technology is to review and understand all the various sources of information and identify new opportunities and potential action steps to better serve your clients.

Not only could AI technology help you be better informed so you can take action more effectively, but it could also assist with minimizing business risks. For example, a number of client behaviors, such as log-in frequency, could identify possible “at risk” clients that require further attention. AI can help identify trends that predict when that client is dissatisfied and might leave.

Now I understand that when we talk about AI technology, some advisors might be thinking that this is somewhat overwhelming, unrealistic, burdensome or even “creepy.” This can especially be the case if your firm has challenges today with your existing processes involving data gathering and reporting. Or maybe you are entirely satisfied with your reporting and data sources, and you don’t see the need for AI technology.

Regardless of your situation, it is important to understand what the future may hold, what would be valuable for your firm, and what steps are needed to improve your existing reporting and data processing. Bottom line, the importance of having reliable and accurate data information today highlights the potential benefits of AI technology.