Why Wealth Managers Are Ready to Leverage AI to Change the Industry

Artificial intelligence has the potential to change financial services forever. And now more than ever, advisors seem ready to jump on the bandwagon.

Attitudes, opportunities and barriers related to AI in wealth management were the subject of a study recently published by a consulting firm Accenture. Their “AI in Wealth Management” A survey polled 500 financial advisors in the United States and Canada earlier this year to “properly assess their familiarity with AI and the disconnects, if any, that exist when it comes to using this technology” .

What they found was overwhelming enthusiasm and readiness for the still burgeoning technology, as nearly all of the advisors surveyed are hungry for AI solutions and are already using AI to some degree.

Approximately 83% of advisors surveyed said they believe AI will have a direct, measurable, and ongoing impact on the client-advisor relationship over the next 18 months. This same percentage of advisors also said they believed AI could achieve a level of sophisticated advice and planning that would ultimately leave them competing with an algorithm for clients over the next 18 months.

Fifty-five percent of advisors surveyed have a strong belief that AI will have a transformative or game-changing effect on the future of financial advice over the next three years, and 92% acknowledge that their companies have taken steps to take action on their AI strategies. .

Scott Reddel, North American head of wealth management at Accenture, said Financial planning that businesses today have a better understanding of AI and more sophisticated ways to deploy it so advisors can realize benefits more quickly. He thinks the industry has also improved in terms of “good use cases” and focusing on exactly where and how AI can fit into their business models.

“I think these companies have gotten smarter in how they present these things to advisors. I think the story resonates a bit more now,” Reddel said. “This is not a ‘replace adviser’ solution. It improves you and allows you to provide better human-led guidance as you wish.

The warm welcome for AI is building in 2022, but wealth management decision makers seemed poised to leap into the tech’s path in the pre-pandemic era.

In a survey conducted by Accenture two years ago, they found that 79% of North American C-suite executives in the wealth management industry believed their organizations were “digitally ready” to adopt new management tools. ‘AI, while six in 10 were already focused on deploying AI. technology in targeted business groups.

Reddel said just a few years ago that there was belief in AI, but also a lot of hesitation and questions about its ability to really change the landscape. But that hesitation has started to fade as more practical applications of the technology have come to market.

“I make the analogy with digital and robo-advisors. When this was first launched all the companies and all the hookup houses looked at this first and said “we can’t do this because our advisors are going to get mad and we can’t cannibalize” , did he declare. “And then it quickly pivoted…so that change kind of started happening with the AI.”

Statistics demonstrate a high level of agreement between advisors and executives, and Accenture’s survey highlights that this is a “somewhat unique scenario when it comes to implementing a new technology to find shared beliefs and interests among key stakeholders who are also willing to transform their work practices and learn to use new technology in the most productive way.

But challenges remain. For example, five in 10 advisors feel their company is being challenged to deliver on their AI vision. Reddel said Accenture is working with companies to help them understand that moving to an AI- and data-driven strategy also requires a mindset and culture shift.

Yelena Melamed, co-founder and product manager at Highlights, said Accenture’s findings are consistent with what it is seeing in the industry. Created in Loyalty Laboratories — the software incubator for Fidelity Investments — and integrated with Redtail Technology earlier this yearCatchlight has developed an AI-based growth optimization technology to support wealth managers.

By using institutional data partners and analyzing over 100,000 successful lead conversions, Cathlight’s technology can find leads who are most likely to need advice from an advisor.

Catchlight’s analytics allow advisors to connect insight with action, and Melamed says this is where the power of AI goes from a high-level concept to something tangible and exciting. .

“There’s a lot more advisor engagement and advisor support now,” she said. “Maybe it’s a better understanding of AI. Maybe it’s fair to realize that the luxury of better markets is behind us. And to be truly effective in the upcoming market, you need to revisit how you might have built your workflow in the past.

Melamed said advisers in today’s market are hungry for meaning behind the AI ​​data they’ve been seeing for years and how they can act on it. In the case of Catchlight, data is used to streamline prospecting by helping advisors quickly identify which leads to pitch and how best to engage them.

She adds that every first AI-facilitated meeting between client and advisor is more meaningful because many of the first steps of traditional prospecting have been skipped.

“They realize he’s someone they want to converse with, and he’s someone who can be interested and appreciate their advice. They don’t puncture the tires. They don’t waste their time,” Melamed said. “It’s a huge added value from an efficiency perspective, and they can personally engage much faster.”

Melamed said it’s also a boon for companies battling for attention in an increasingly competitive, digital-driven marketplace where client-advisor matches are no longer constrained by geography.

“It doesn’t just make you more efficient. It also allows you to stand out from the competition because you are engaging in a personal way. How many emails (financial services) do we all receive that constantly look the same? I tend to get a lot of them…and they’re completely fooling me,” Melamed said. “A few data points that Catchlight can provide will make them much more efficient, because it’s all about the eyeballs and the quality of the communication.”

To prepare for a more seamless deployment of AI technology, Accenture recommends that multidisciplinary teams be created by companies and tasked with implementation. A “smart deployment” model can keep a company’s pace of innovation using AI against the rate of adoption at stage, avoiding inconsistencies and headaches. Internal multidisciplinary teams are also likely to be more familiar with these specifics, making them better suited to handle this work.

Accenture’s study also identified three critical factors to help improve a wealth management firm‘s ability to scale, overcome barriers, and help organizations realize the full potential of AI.

First, companies need to focus on delivering a single use case or program to completion. “Aim for an approach driven by a clearly defined business strategy, not technology,” the study says. Accenture warns that too many pilot or in-progress initiatives can lead to confusion and frustration.

Next, ensure that business priorities align with areas where advisors find great value. Keeping financial advisors informed can facilitate an AI adoption process that requires a lot of change and effort.

And third, maintain ongoing leadership support to ensure the success of AI programs. Accenture believes that leadership sponsorship is critical to setting the tone at the top and ensuring there is sufficient internal capacity, funding, and dedication to achieve AI goals.

“This sends a powerful signal that successful AI scaling requires an operating model with defined processes and owners to measure value, appropriate funding levels, and established executive support,” said a press release from Accenture.

Dolores W. Simon