Artificial intelligence is increasingly expanding within financial services, and wealth management is no different. How well it integrates into the relationship between financial advisor and client, however, is the topic of a new study from Aite Group.
The study explores whether AI can increase speed to market and firm profitability and/or whether it can improve service offerings, advisor-client relationships and ultimately client outcomes.
Since AI can provide recommendations to advisors or directly to clients on the best course of action in setting goals and in investing, use reams of data to recommend investment ideas or trade opportunities, stress-test portfolios and evaluate risk tolerance, analyze previous client behavior and even compare similar clients to predict life events, there’s a vast realm of opportunity to speed up processes that can take a human advisor far longer.
But how well it can do these things is only part of the question. There’s also the question of how well it fits between the human advisor and her client, and how comfortable either is with the change. Some of its capabilities, after all, include monitoring and evaluation of advisor notes, surveillance of transactions and tracking regulations and compliance.
Some concerns include data privacy, resistance to change and difficulty in evaluating technologies. Yet with executives believing in AI’s inevitability, and large firms leading the way in designing programs based on it, smaller firms and vendors find themselves having to adapt. In fact, according to the report, while “wealth management is characteristically a human and emotional endeavor,” with constant changes in regulation, target markets, global uncertainty and “disruptive innovation,” it’s expected that AI will gain momentum over the next three years.