One thing dominating the headlines and conference conversations everywhere is artificial intelligence (AI). It’s not just a tech world conversation, it’s overtaken business by storm. Wealth management and financial advice is no exception, and the expanded capabilities AI offers firms is both staggering and transformative.
In late 2022, McKinsey found that 70 corporate and commercial banks significantly accelerated the implementation of advanced automation, which is typically enabled by AI technology. This trend has no doubt grown with the introduction of widely accessible generative AI and improvements in predictive analytics.
For RIAs and wealth managers wondering how to jumpstart their use of AI, the sooner they can dip their toes in, the better. As the technology evolves, organizations need to stay abreast of the latest updates and consumer expectations. Particularly for wealth management firms, offering services to an increasingly younger generation of investors requires embracing new tech and its inherent convenience. Here are three ways AI is transforming the financial industry right now.
Seeing Trends in Data (and Knowing What to Do About Them)
The first change AI brings to the wealth management industry is the increasingly critical role of advanced data analysis. When assessing and mitigating risks, automated platforms with built-in AI make the process more streamlined, quicker and reliable. Based on its implementation, tools with data analysis can identify market trends, review how assets are performing over time and occasionally even predict future market outcomes.
Certain trading practices — when done under the watchful eye of a skilled human employee — can also be completed via AI-enabled platforms. Algorithmic trading can pounce on opportunities while also monitoring the immediate and long-term impact of such investment decisions.
Other benefits of smart data analysis include:
- Built-in statistical methods for calling out notable trading patterns.
- Extraction and surfacing of relevant data.
- One-stop shops for all things data-related, including customer information, market fluctuations and automated recommendations.
- Visualizations that make data easier to consume for both RIAs and their clients.
For firms concerned about the potential negative impact of AI on employee jobs, the reality is that a “human touch” has become more critical than ever due to AI’s procedural capabilities. The creation of unified, intuitive platforms that segment customers based on behavior and provide curated recommendations for RIAs can actually reduce time spent on what, historically, were largely manual tasks. Having direct insight into a portfolio’s performance can bring RIA attention to the clients that need it most, which further improves customer relationship management.
Personalization Matters More Than Ever
A second — but by no means less important — shift due to AI is improved personalization in client-advisor relationships. The availability of data analytics provides intimate insight into the behaviors of individual investors. Viewing data on such a granular level allows advisors to make customized recommendations and better align client values with their portfolios.
Similarly, AI integrated with advanced data automation tools helps firms segment customers based on pre-configured settings. This capability, in turn, allows RIAs to tweak transactional and marketing messaging based on their target audience. For clients with a longstanding relationship with a firm, special offers or investment opportunities might be made available as a reward for their loyalty while prospects receive different communications.
Client personalization due to AI can have a far-reaching impact beyond just sending targeted email blasts. In fact, most investors — particularly those from the millennial or Gen-Z generations — expect some level of digital personalization in their service experiences. Having access to online portals with AI-generated insights into their portfolios and getting recommendations geared towards their expressed preferences can mean the difference between a short-term and lifelong customer.
Expanding Access Without Expanding Overhead
Another benefit of AI-powered automation is that it makes it possible to serve clients with lower asset levels in a cost-effective way. By streamlining routine data collection, communications and reporting, advisors can offer a consistent and personalized experience, without increasing workload. This helps firms scale their service models, extend their reach to next-gen investors, and deliver value across a broader segment of clients.
Providing RIAs with the latest and greatest technological tools to enhance their jobs minimizes risk and optimizes the opportunities available to them and their clients. Allowing AI to provide increasingly better insights into the market gives RIAs the freedom to focus on cementing their customer relationships by providing exceptionally personalized service.
Why Security Matters More Than Ever
Ultimately, perhaps the most notable benefit of AI technology is its capacity to detect and prevent illicit trading activities and security breaches. The same platforms that monitor market performance and investment peaks and valleys can also flag problematic behavior that could result in significant fines and customer information breaches if left unchecked. Maintaining high surveillance standards is much easier when tools provide greater transparency throughout the entire system. AI technology ultimately helps mitigate the nasty surprises that infractions and cyber threats often cause.
One of the most impressive abilities of AI in financial services is its ability to collect and identify anomalies over time. Since artificial intelligence learns to recognize data points collected at both regular and irregular intervals, it becomes increasingly more adept at noticing events outside the norm of expected behavior. The advent of natural language processing technology brings these insights into the written word, allowing platforms to flag potentially fraudulent activity by interpreting text-based messages. Firms can even set up alerts for specific keywords that may indicate illicit activity.
When it comes down to it, AI is no longer a technology of the future: instead, its impact is being felt every day in nearly every corner of the globe. To remain competitive in an ever-changing field and continue to deliver on customer expectations, firms and RIAs must be bold in investigating and adopting platform solutions that utilize AI and automated analytical capabilities.
Docupace is embarking on the most ambitious transformation in the industry’s history: building the first comprehensive agentic AI platform designed explicitly for wealth management. Our vision centers on deploying specialized “digital teammates” that will automate 60-80% of manual processes while maintaining bulletproof regulatory compliance. Click here to learn more.
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