The Artificially Intelligent Wealth Advisor

The Artificially Intelligent Wealth Advisor

Christopher Monaco

Content Marketing Manager, Financial Services at Seismic

Views 426

The Artificially Intelligent Wealth Advisor

07.12.2016 07:15 am

Last week William Trout, Senior Analyst at Celent, presented a webinar on the evolution of artificial intelligence (AI) in wealth management and whether or not its full maturation, predated by that of robo platforms, will spell doom for human advisors or in fact strengthen the delivery and scalability of service, thereby enhancing the overall client experience. Indeed the notion of AI resonates, as the general topic of technological integration to improve efficiency and transparency is one of utmost prominence within the industry these days. Celent’s clients can watch the recording on-demand, but for those who don’t have access, here are five points of saliency pulled directly from Will’s incredibly fascinating presentation.

  • Three levels of AI: The development of intelligence technology has come in the form of three levels or rather stages: machine learning, deep learning, and artificial general intelligence. Machine learning is by far the most common and widely understood of the three, as it involves the existence of “computational firepower and the ability to recognize context and make deductions.” This type of AI has been present within high frequency trading for some time. Deep learning entails “overlapping neural networks in order to draw and learn from data similarly to that of a human brain.” IBM’s Watson comes to mind. Finally, and perhaps most ominously to some prognosticators, resides artificial general intelligence, which displays the consciousness and sentiment of an actual human being. While this highest level of AI exists, Trout believes we are still quite distant from the manifestation of John and Sarah Connor’s worst nightmare.
  • Three areas of opportunity: Delivery capacitation will streamline processes and improve efficiency by automating learning and client meeting prep. Investment allocation will allow firms, especially asset managers, to take what Trout calls a “house view” and proactively capitalize on market patterns, delivering stronger, more consistent returns for investors. Lastly, AI will help firms and their advisors lower risk and meet compliance by running suitability and fraud checks.
  • AI as a complementary not independent agent: While portentous individuals tend to see the evolution of AI as the long farewell to traditional advisors, it is more likely that such advanced analytical platforms will enhance the capabilities of humans, reducing the cognitive burden of information overload. AI will complement, not replace, the human to human experience by automating the discovery of knowledge, thus bolstering an advisor’s investment insights and adding value to the relationship. AI’s aggregation of endless information will help complete a person’s sphere of knowledge, supplying him or her with known unknowns and unknown unknowns. This amplification of intelligence should only enhance the client experience, benefiting one’s financial goals over the long term.
  • Robo’s endpoint: The functional capabilities of robo are essentially reaching their apex, as the technology is reliant on data inputs for investment allocation and doesn’t come close to AI’s predictive power nor a human advisor’s level of personal, emotionally discernable service. As AI transcends the robo horizon and empowers traditional advisors by eliminating manual tasks and furnishing a vast supply of instantly accessible knowledge, the doomsday robo scenario will fade from view. Ironically, the evolution of technology within wealth management isn’t exclusively advancing robo platforms, as was once speculated; it’s reinventing and reinvigorating human advisors.
  • A broader transformation is at play: The utilization of AI is not occurring within a vacuum. Rather, the technology is part of a larger transition, one that involves wealth management moving from a transactional business to one primarily driven by relationships. Advisors will continue to execute processes, but collaboration is certain to be more prevalent and paramount than ever. There are five factors propelling this transformation: regulation tailwinds; the C-suite looking to integrate tech solutions; advisors wanting simpler tools; investor skepticism and demand; and investor preference for real-time knowledge.

Will is speaking on this very topic at an invitation-only roundtable on December 8 in London. The event is entitled “Vision 2020: Digital Wealth & Asset Management,” and by the looks of the program, the day should be undoubtedly advantageous for those in attendance.

Latest blogs

N/A ReliaMax

College Dreams? Here’s How to Get Accepted

Higher education in the United States is not just about getting accepted, it is about where you get accepted. Sure, there are options, there are seemingly endless options - from community colleges to Ivy League schools and everything in between. The Read more »

Bobby Gill GCWealth

Bobby Gill: 3 Ways Fintech is Helping Small Businesses During the Pandemic

Image Source: Pixabay. Back in April, the US oil prices sank to a 20-year low. In the UK, road traffic levels hit a 70-year low. Worldwide, due to lockdown, retail, travel, and restaurant bookings have dropped by 85%. More than 430 million Read more »

Christa Ardley Bitstocks

Bitcoin and blockchain without the b******t

An industry once viewed by the general populace as a haven for criminals and online scammers, and still somewhat marred by fractious in-fighting, Bitcoin and blockchain are gradually casting off their outdated negative reputation; as the focus Read more »

Otabek Nuritdinov Safenetpay

Beyond Payments Services

    Why it really matters for small for medium-sized enterprise (SMEs) to choose the right payments services provider. Strategic planners in the financial services sector often define their business in terms of products that Read more »

Chak Kolli DXC Technology

How Can Insurers Realise the True Value of AI?

As Artificial Intelligence (AI) and digital transformation find their way into every aspect of our daily lives, we are gradually seeing changes taking place in different sectors. Progressively, AI is permeating the insurance value chain and it is Read more »

Related Blogs

James Turner Turner Little

How Trusts Can Protect Your Wealth In Tough Times

The future belongs to those who plan for it, and when it comes to wealth management, succession planning or safeguarding your assets against unforeseen circumstances, it’s never too early to start planning.  Read more »

Christopher Monaco Seismic

It’s Time to Comply with the DOL Fiduciary Rule

This past Monday Celent’s Senior Analyst of Securities and Investments William Trout partnered with Seismic’s GM and VP of Financial Services Craig Dunham for a webinar on the DOL fiduciary rule, how firms are scrambling to meet the regulat Read more »

Christopher Monaco Seismic Software

Managing Expectations in an Indefinite Financial Services World

One of the best visuals juxtaposing expectations against reality takes place within what is widely considered a masterful scene in the adored romantic comedy 500 Days of Summer. Cinematic digression aside, such a balancing act is not only an Read more »

Christopher Monaco Seismic

4 Keys from the Financial Communications Society’s Millennial Luncheon

Last Wednesday the Financial Communications Society (FCS) held a Boston luncheon on marketing financial services to Millennials. Read more »

Christopher Monaco Seismic Software

Where Are They Now? The DOL Fiduciary Rule’s Stakeholders

As we approach the six-month mark of the Department of Labor’s final ruling on fiduciary care within wealth management, it’s worth looking at where, legally speaking, the piece stands, how affected parties are responding, and which specific points Read more »

Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel