Wealth Managers Assess AI

Terry Flanagan
This entry is part 4 in the series Artificial Intelligence in Financial Services


Friend or foe?

That’s the question some wealth managers are asking themselves about artificial intelligence.

Flesh-and-blood financial advisors are concerned that the machines that simulate human intelligence processes will take their jobs. But at the same time, there is a significant opportunity for advisors to optimize their own performance and make themselves that much more valuable to clients.

“The biggest challenge for wealth managers in their rate of adoption of artificial intelligence is getting the financial advisors to buy into leveraging the technology,” said Josh Sutton, managing director at Publicis.Sapient. “There’s still a significant fear among the FA community that they are going to be disintermediated by technology.”

“Forward-thinking financial advisors look at tools like artificial intelligence as something they want access to, because it will enable them to manage a much larger portfolio of clients than they would be able to if they had to do everything manually,” Sutton continued. “If I as an FA can use artificial intelligence to bring a great idea to a client that doesn’t require me to spend hours researching, that provides me more time to maximize human interaction across a wider set of clients.”

Artificial Intelligence in wealth management is most commonly associated with so-called robo-advisors, which provide automated, algorithm-based portfolio management. But the utility of AI goes well beyond the blocking and tackling of asset allocation. “The real benefit of applying artificial intelligence to wealth management is going to be enabling people to find and identify bespoke investment opportunities,” Sutton said.

For example, a young investor with a long time horizon and interests in renewable energy and biotechnology can find a comprehensive and global menu of customized investment ideas via a machine-learning platform. “This requires a much higher degree of AI than what’s currently being deployed, but it is still very possible to achieve today,” he said.

Mike Adler, IBM Watson

Mike Adler, IBM Watson

ANZ Global Wealth, which manages about $61 billion on behalf of more than 2 million customers, has been working with IBM’s Watson Engagement Advisor since 2013. The Australian wealth manager deploys Watson in a Sydney call center “to observe the types of questions coming from both customers and financial advisors, helping enable its financial advice team to deliver an improved advice process, ultimately delivering faster, more personalized financial recommendations to customers,” said Mike Adler, global financial services leader for IBM Watson.

“For Wall Street, Watson’s ability to uncover new insights means cognitive computing has the opportunity to change the way wealth managers and financial service providers make decisions and counsel their clients,” Adler told Markets Media.

More broadly, “there is a realization from businesses that to advance beyond being digital, you need to have the intelligence behind it,” Adler said. “It’s about having a technology platform that can think and learn over time that creates the foundation for connecting in the right way with customers and augmenting employee decision-making. This is what it means to embrace the transformation to cognitive.”

Adler said the application of artificial intelligence is on just the first decade of what promises to be a multi-decade journey.

While the future of AI appears boundless, today’s financial advisors care most deeply about what machine learning can do for them today. In December 2015, that’s taking care of the behind-the-scenes stuff that would otherwise constrain an advisor’s capacity to call and meet with clients.

“‘Robos’ are beginning to use algos and analyze data in ways that are changing and disrupting financial services,” said Arthur Weissman, head of sales and marketing at WealthForge and formerly a Citi financial advisor. “The FA role is tantamount to relationship management. As an FA, I want to talk to my client and focus my energy on building relationships.”

Featured image by anjokan/Dollar Photo Club

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