As a firm and individually, we have been actively studying the use of artificial intelligence (AI) in wealth management—and more specifically how investment advice generated through AI is sought out and applied—for the past three years in its many different applications across the industry. In our view, the wealth management industry is built and will continue to evolve around human relationships, clients’ personal values and their most meaningful choices. The question is how advancements in AI could help the wealth management industry even more.
I believe that AI can improve the advisor-client relationship significantly through the combination of richer information, meaningful service, and superior efficiency. Earlier this year, financial advisors (FAs) shared with us their beliefs around how to effectively use AI for their day-to-day business. Not surprisingly, FAs already know how AI can help them to not only boost service levels but to equally enhance relationships with clients.
For this blog, I wanted to single out the top three use cases FAs want, and that firms could anchor on as jumping-off points for leaders looking to scale AI at their firms:
- Expanding hybrid advice
40% of financial advisors want to apply AI intelligence to identify what they should do next in terms of better satisfying customer needs.
By delivering more meaningful and personalized communication, wealth management firms will have a much higher chance of increasing customer loyalty and retaining clients long-term.
Insights on advice*: For example, there is an emerging group of new investors wanting specific supports on topics like cryptocurrency and environmental, social and governance (ESG) investing. This desire will likely lead to further growth in ESG and socially responsible investment products with e.g., 84% of survey respondents in our Wealth Management Consumer Study in North America planning such purchases in 2022.
These are mostly underserved new investors seeking personalized advice across a mix of financial needs, sparking new opportunities for advisors to expand their services. Also seen as a new chapter for the wealth management sector, evolving from hybrid advice to holistic advice, clients today expect information that combines digital, virtual, and human interaction in a personalized manner that they can control.
- Leveraging affective computing
40% of financial advisors want to use AI to process and understand a client’s emotions.
AI allows for the delivery of customized portfolios and client touchpoints at exactly the right time in the client’s life, in ways that human advisors would not be able to achieve on their own. AI can be programmed to better enable advisors with unique correlations between financial events that are of importance to their clients.
Insights on advice*: As clients are increasingly seeking holistic information, a deeper relationship has been forged with advisors based on trust. Almost four in ten investors (39%) in our consumer survey wanted to hear from their advisor more proactively with nearly one-third (28%) wanting more meetings.
Client demand was driven by increased longevity, a global need for retirement saving and an increased focus on financial wellness. The pandemic added complexities that triggered new priorities, leading clients to think differently about their financial health.
- Enabling proactive, data-driven client engagement
37% of financial advisors want to deliver a sense of trust with AI-generated, data-driven proactive engagements and outreach supports.
FAs could benefit from AI by gaining a deeper understanding of their clients, which would allow them to intervene more proactively to help make sure their clients have what they need, when they need it most.
Insights on advice*: A person’s relationship with money is private, individualized and complicated in that clients’ individual desires vary across generations. FAs could use AI to segment their advice propositions by various demographic parameters. We see opportunities for wealth management firms to e.g., expand their capacity using AI to meet the diverse needs of currently underserved clients across the spectrum. Additionally, when we asked investors who they trust for investment advice, 71% noted they wanted an advisor whose values and political leanings were aligned with their own. Also of interest, 69% of clients said they wanted an advisor who would include their spouse in planning and interacting.
Elevating understanding across the sector
Based on our AI in wealth management research, more than 1 in 5 financial advisors believe AI could be most helpful in segmenting clients to further understand acquisition, growth and retention goals. AI could help provide the level of mastery FAs want to achieve through personalizing their clients’ portfolios and engaging with their clients in meaningful ways. Leading AI tools could therefore help boost FAs’ service levels and help anticipate clients’ needs, enabling good client relations—through trust.
AI adoption is growing faster just as people are nurturing valued relationships like never before. These changes in behaviours—a longing for empathy and trust in a digital world—remain dominant across the 2022 findings from our Fjord Trends and will likely impact the investment sector in profound ways.
Technology can serve as an extension of our human capabilities. This scenario plays out well in wealth management as AI could allow advisors to best support their clients’ vision on reaching their most personal financial goals. A major prerequisite: financial advisors and their firm’s leaders will need to navigate their way forward together using a fully digital and human service model, not as a transaction but as a guide, to succeed in this disruptive time.
How do you get started? Feel free to message me, Keri Smith, so we can set up time to discuss.
Special thanks to Kevin Yang, Senior Manager – Strategy, Banking and Capital Markets, for contributing to this blog.
*Insights on advice were taken from the Wealth Management Consumer Report: The New State of Advice, published by Accenture in 2021.