AI Eyes Wealth Management


The conventional wisdom is that that AIs, or robo-advisors, will provide the necessary financial advisement for the retail client, which frees up the advisor to provide more of a human touch to high net worth clients.

However, William Trout, senior analyst, wealth management, at industry research firm Celent, has written a new white paper on how AI is moving up the food chain.

“What AI is trying to tackle in the wealth management space is cognitive overload and automate discovery,” he said. “Humans have a finite ability to keep more than a few things in their minds at any one time. Certainly, a book of 200 clients will provide a challenge for advisors to balance the concerns and interests of all their clients.”

With automated discovery, AIs will increase the advisors’ capacities and allow them to think more deeply about where they are going and how they are going to their clients reach their goals, he added.

Trout believes that the high net worth clients will gain the greatest benefits from the application of AI over the retail investor.

“If there’s no money, there’s not that much to plan,” he noted.

As AIs automate tasks, such as meeting preperation, they will help advisors be more relevant to all of their clients.

He doesn’t see the benefits from applying AIs to portfolio construction.

“That has been commoditized- by the whole robo-advisor phenomena,” said Trout. “Charles Schwab doesn’t even charge a fee for that. I don’t think clients would get that much value out of that.”

Deploying AI in wealth management certainly will change the role of the advisor from a project manager to more of an overseer, according to Trout.

So far only a handful of large banks, such as Citi, ANZ, and DBS have dipped their toes into the AI waters by using IBM’s Watson for specific tasks like customer segmentation.

“Firms and advisors are just trying to figure out what is machine learning and how applicable it is for them,” he added. “It’s no coincidence that the significant advances in this space have been made by start-ups,”

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