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AI Bringing Sexy Back to the Back Office

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What You Need to Know

  • The promise of sexy new technologies for advisors has been hyped for a long time.
  • Finally, AI and its corollary technologies are ready for the back office, which will improve advisor workflows.
  • One way AI can help is by analyzing tax returns and financial plans to suggest the next best action for an advisor to take.

The promise of sexy new technologies such as artificial intelligence for the wealth management industry has been covered extensively — so much so that we are still wondering when the hype stops and reality starts so that it will actually help advisors do a better job with their clients and their businesses.

The theory goes that by harnessing Big Data, AI applications will provide predictive analytics to help advisors be more proactive at the advice and service levels.

For example, an AI bot can monitor the activity of a client’s usage of a client portal to detect any patterns that would indicate they are at risk of leaving, such as logins at weird hours of the night, frequent checking of performance reports, subsequent money movements and other actions.

By comparing this activity with that of other clients who have left, the AI bot can identify a list of potential defectors and send an alert to the advisor to check in with the client and see if there’s anything they can do to hopefully alleviate the situation, save the account and keep the client.

Other much-hyped applications that AI can deliver are through the mining of Big Brother databases to anticipate client life changes such as sales of businesses, marriages, divorces, deaths, births of children, etc., to predict future financial planning and investing needs.

Through this type of application, advisors will receive alerts from the AI bot to identify which of their clients and prospects will soon need their expert planning and investing advice to capture the “money in motion” caused by the life event to gather incremental assets and generate new revenue, all while enhancing service levels.

This all sounds cool and sexy in theory, and as a result has captured the imagination of C-suite executives, analysts and technologists industrywide. The reality, however, is that this type of AI works only when it can harvest massive amounts of data from millions of accounts, making it still out of reach to the average advisory firm that is serving just a few hundred households.

But Wait …

The good news, however, is that AI and its corollary technologies, such as machine learning (ML), natural language processing (NLP) and robotic process automation (RPA), are ready for prime time in wealth management with much more immediate results. These benefits, however, reside in the back office of advisory firms, not necessarily in the front, and can dramatically affect an advisory firms’ operations, compliance and administrative workflows — all of which are essential to improving service in a highly competitive service profession.

This is critical because while back-office employees typically do not interact with clients directly, 60% of client dissatisfaction originates from back-office service interactions and not necessarily from their advisor. Because workflows in wealth management operations are repetitive, data-based and labor-intensive, the back-office is a great candidate for AI and its cousins RPA, ML and NLP to drive workflow automation.

For example, according to CapGemini, RPA in the back office can reduce 70% of the cost of a full-time employee, providing a quick and tangible ROI to advisory firms.

Some of the applications of these workflow automation technologies may seem simple, yet they can dramatically increase capacity in advisory firms. Consider client meetings as an example. Advisors often have hundreds of client meetings in a year, and just scheduling, confirming and preparing for those meetings can bog down advisors and their staff on a daily basis.

By combining AI and NLP, virtual assistants (e.g., your own Siri or Alexa) can be programmed to automatically check the firm’s CRM for upcoming meetings, send an advance digital communication out to the client (either email or text) to coordinate, confirm and get the meeting scheduled on the advisor’s calendar without any staff involved.

From there, the virtual assistant can integrate with the financial planning, reporting systems and custodian/broker-dealer account data to automatically prepare the information for the client discussion by providing a complete package for the advisor to have before the meeting.

Business Support Systems

The concept here is a new category of wealth management technology known as “business support systems.” Leveraging AI and advanced technologies to orchestrate the advisor’s tech stack with their custodian and broker-dealer account data enables firms to automate many time-consuming workflows and holds much promise — with the good news that business support systems are available today and not in some metaverse future.

Other similar use cases for business support systems include new account opening, prospect nurturing and compliance reviews. These workflow automation processes can save firms thousands of hours every year, dramatically increasing capacity and productivity and improving the advisor and client experience.

As an interesting aside, despite initial concerns about working with a robot in the background, early experience has shown that clients are not put off by these electronic communications. In fact, many advisors using virtual assistants via business support systems report that most people these days abhor phone calls and prefer scheduling in this manner.

Another application of these new technologies is in capturing “unstructured data” and being able to process it in various applications. When data resides in electronic forms or spreadsheets, it is relatively straightforward to capture this data and process it. But when data is in unstructured documents such as letters, contracts or PDFs, it can be challenging to automate, creating manual workarounds.

Particularly for the alternative investment space, much of the information advisors need for reporting, tracking and analyzing lies in static PDF documents. AI and ML can be a powerful tool for enabling intelligent data extraction and being able to produce it in a digital and workflow-automation-friendly format.

Other Applications

Another area where AI is having an impact in modern advisor technology is in the ability to analyze tax returns and financial plans to suggest the next best action for an advisor to take.

By scanning these documents, AI applications can proactively identify planning and investing opportunities through powerful algorithms, saving advisors hours of time per client analyzing client scenarios to come up with optimal recommendations, while automatically illustrating planning solutions and generating proposals.

And for those M&A-hungry firms, RPA shows much promise to simplify and streamline the tasks of transferring large amounts of data from one system to another after an acquisition, such as from the selling firm’s CRM to the buyers. All you have to do is train an RPA bot once in a workflow automation platform to copy and paste data from one field to another and then turn it loose on the hundreds or thousands of accounts acquired, and the job is done quickly and accurately with no human intervention required. What once took weeks can now be done in minutes.

Just as Justin Timberlake transformed himself from just another ex-boy band member into a solo superstar with the critically acclaimed hit single “SexyBack,” so too can advisors rejuvenate their firms with these new AI-driven technologies.

So, let’s make 2022 the year you let AI do the busywork, so you can do the human work and bring the sexy back to your business.


Timothy D. Welsh, CFP, is president, CEO and founder of Nexus Strategy LLC, a consulting firm to the wealth management industry. He can be reached at [email protected] or on Twitter @NexusStrategy.