If you’ve ever asked Alexa to play Baby Shark 10 times in a row to quiet an agitated toddler or relied on your car’s navigation system to get you where you’re going, you are already on the AI bandwagon. However, as AI’s capabilities grow – seemingly exponentially – so do the concerns about its immediate and long-term effects on our professional and personal lives.
Like most industries, the wealth management space has already been impacted by AI. And why wouldn’t it? AI offers productivity, precision and cost efficiencies. It helps businesses operate more effectively, scale more quickly, analyze data more accurately and calculate faster. It’s a tool – a powerful resource that may prove to be a great equalizer, closing the service gaps between large-scale enterprises and their smaller counterparts. The question now becomes one of degree.
If past is prologue, technological disruptions like AI are a long-term positive. In the near term it can elicit fear and concern along the entire industry food chain, from admins to regulators. To my mind there’s no seismic shift in the offing for the near term. Like robo-advisors, AI will cause a bit of a disruption, but ultimately will not fundamentally alter the nature of advice.
AI-based advice as a true robo advisor has already seen market share penetration. Existing robo advisors are in most danger of being replace by ChatGPT and its successors … especially if ChatGPT can drive more scalable solutions with traditionally labor-intensive parts of the asset management process (e.g., due diligence and research).
As Rosh Cherian, CTO and co-founder CogniCor, a wealthtech firm that provides AI-enabled digital assistants to the financial services industry, recently noted in a Wealth Solutions Report interview, “AI will not replace our jobs, but the person using AI will.”
What This Means for Traditional Wealth Industry Employees
There are areas where the efficiencies and accuracy of a ChatGPT outpace a variety of traditional players in wealth management, not just financial advisors. It’s faster, cheaper, more accurate and doesn’t call out sick. Should folks in recruiting, transitions and onboarding be looking over their shoulders? Many who think the sky is falling are actually far removed from the day-to-day activities of those who actually complete the tasks and drive revenue for the industry.
I believe completely replacing the human element in financial services with AI is a non-starter for at least the coming decades. Investors crave the emotional insights and support of a human advisor. The same can be said for the recruiting, transition and onboarding functions. AI can be a key part of the toolbox, but not its entirety.
When I am working with advisors in transition, we’re looking for “Feel, Fit and Financials.” An advisor’s business is probably the most valuable asset they own… and no one is ready to put it in the hands of a machine. Human interaction and personal experience are indispensable components of the undertaking. Plus, let’s not forget, we are all operating in a highly regulated industry.
Who knows how long it will take for rules surrounding the use of AI will be implemented?
AI-based platforms have all the markings of a game changer. From investment research to compliance, there are many functions where the data analytics ecosystem has been elevated. The ability for innovation to drive exponential change across all industries will continue and most likely accelerate. The key is to take a step back to truly understand what an AI-based technology is likely to change – and what it won’t. The human qualities so necessary in the wealth management space … the empathy and the intuition … are still beyond AI’s reach. And will remain so for a good while.