Industries across the spectrum are now finding ways to leverage artificial intelligence to better serve their customers—the financial-planning industry is no exception.
“AI is going down the same path. People say, ‘Robots are going to take over!’ But that’s just more noise and it distracts people from what they really should be focused on,” Fritz says.
Companies are now developing AI and machine-learning tools that advisors can use to more accurately predict when and how clients may need certain advice, freeing up advisors to do what they do best—help clients develop the right plan to meet their lifetime financial goals.
Custodians leveraging AI
The key to using AI and machine learning, the natural-language processing part of artificial intelligence, is to have high-quality data that is readily available and trusted by the advisor and other stakeholders, Fritz says. Without a centralized source of quality data, most of these tools don’t work, he says. But that takes the integration of information from the custodian, the CRM platform, and other platforms that advisors use in their practices.
The goal is for advisory firms to have their own set of data, emancipated from their technology and custodian partners, in which they can bring together client profile data, account holdings, price history of transactions, planning data, and compliance data, he says.
“The goal is to apply sophisticated algorithms to all of these integrated data sets, to provide advisors with suggestions on how to improve their practice,” O’Gara says. “It will also provide suggestions to advisors on what a client’s next action might be, based on client behavior.”
Currently, voice recognition technology exists in Alexa-type applications, where a client can get answers to questions such as “What is my account balance?” However, adoption is somewhat mitigated by the level of comfort with a given technology. “I don’t think we’re quite there yet,” O’Gara says.
There are also regulatory concerns. Advisor-client communications have to meet compliance standards, and firms need to get more comfortable with digital-channel adoption, though this transformation is starting to happen, he says.
“AI will ultimately help advisors move from reactive actions for their clients to predictive actions, where an advisor may be able to prevent a client from leaving,” O’Gara says. “Additionally, bringing in data aggregation tools, and looking at actions that clients are taking outside of their primary provider, will help advisors to deliver better advice.”
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While many companies have been slow to adopt the technology, due in part to steep implementation costs, AI and deep learning are rapidly appearing in the financial service industry. Financial advisors and RIAs, who have already been buffeted by industry changes, are at great risk of being left behind if the forgo this new innovation.
AI for Ordinary Investors
If you aren’t a Wall Street trader, you can still find ways to take advantage of the purported benefits of artificial intelligence in picking stocks or timing the market – but it won’t be found through most roboadvisors
Automating Client Service
It’s likely that many of your clients’ inquiries are questions that could be handled by an AI-driven assistant, guided by parameters that you set. This virtual assistant could perform an analysis of the client’s question and have some suggested alternatives ready for you to review and discuss.
This system could be set so that there is continual analysis of your client’s financial picture, suggesting options as the client’s situation evolves. Perhaps they have a loan that could be refinanced or there has been a recent change in the tax law that would trigger the system to automatically review the impact on all of your clients.
Costs of Falling Behind
While these scenarios may seem futuristic, many of them are already being implemented by industry giants. Lagging behind in technology can pose a huge risk to advisors, especially those that are working with the next generation
While AI and related technologies have not replaced human financial advisors and are unlikely to do so, AI will enhance advisor’s analytical capabilities and automate a number of mundane back-office tasks, reducing costs across the board. AI and other technologies are a tool and advisors who wish to continue to prosper will need to continuously stay on top of these technologies and strategically incorporate them into their practices.
Contact our experts for more understanding of AI technologies in your industry