It’s no secret that artificial intelligence (AI) continues to rapidly change the financial services industry with advances in robo advisor capabilities. Now is the time for wealth management firms to pay attention to its profound impact on the future of advising and how to leverage AI to stay ahead of the curve.

The current model for pure-play robo advisors puts investors into portfolio based on automated risk-profiling tools. Its low cost and simplicity makes it a compelling value proposition, but it does not usually foster the sense of trust, brand recognition or customized experience that investors might expect. While clients may rely on digital tools for transactions such as checking, payments and simple investment strategies, they continue to expect human advisors to tailor solutions for their unique situations and goals. This is why many wealth management firms and large banks are investing in robo capabilities and combining them with human interaction – hybrid advice.

That being said, we know that AI advancement will enhance robo advice capabilities, which will continue to change the role of the human advisor. Enhancements in cognitive computing, big data and behavioral analytics will augment AI further and will allow machines to sense, comprehend, act and learn. This will quickly pave the way for technology to gather and understand complex client needs; propose and implement solutions based on historic client behavior; and explain complex concepts in the context of each particular client. In a nutshell, holistic and customized advice could become fully automated.

How will that change the role of financial advisors in the long term? We believe that advisors will be able to spend more time on value-add activities surrounding client relationships and holistic financial planning, and increasingly less time on portfolio management.

Essentially, AI will become the investment managers, while advisors will become the relationship managers.

This presents wealth management firms with an opportunity to develop ‘Client Intimacy,’ a deep awareness of the client on both a financial and personal level, inclusive of their affinities, investor preferences, money mindset and personalities. Arming advisors with a comprehensive 360-degree view of the client through advanced technology will empower them to proactively engage clients on what matters to them the most and on their terms. This satisfies the three main pillars of client intimacy: empathy, responsiveness, and self-sufficiency on the client’s terms. Ultimately, enhanced customer experience will be the main differentiator for wealth management firms.

Successful wealth management firms of the future will be the ones that start considering how to prepare and equip their advisors to leverage AI and data analytics to drive more relevant offerings for their clients while remembering the value of the human relationship.

As your wealth management firm is working to stay ahead of the curve while managing the financial advisor transformation, email me, Christian Spitz. I’d be happy to have an in-depth conversation about how to prepare your firm for the future of advising.

3 responses:

  1. I am not sure weather complete AI will work on logical and emotional subjects. It’s not that will only lure customer by showing benefits. I am sure most of the customer wants to have emotional support as well. Thanks

  2. It’s all very well and I think that many jobs will change with AI, howver the editor of this article leave out one minor detail – automated profiling, including automated decisions are prohited under the GDPR. Something that concerns all EU Citizens irrespective of where the processing takes place. An individual must always be able to speak witth a human. This means in practise that much of the processing can be done automatically, but for e.g. a final decision. humans must be involved. A minor detail that could be worth keeping in mind.

  3. Artificial intelligence has made the careers of some financial advisors redundant due to better results. However, there are some people like me who would be more comfortable if it was a human on the other end.

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