Beyond efficiency: 3 tips to maximize generative AI for wealth management

September 13, 2023 10:24 AM

Caribou CEO and Co-Founder Christine Simone talks AI at Future Proof 2023

As she took the Future Proof stage before an audience of advisors eager to make the most of the generative AI technology that has dominated much of the tech conversation in 2023, Christine Simone made it clear that she isn't a deep AI expert.

She also doesn't have a strong financial services background, nor does she have any plans to become an advisor of any kind anytime soon.

But before the capacity crowd in front of her could politely pack up their laptops and head to another session at the second running of the unorthodox beachside wealth conference, the CEO and co-founder of fintech startup Caribou assured them all that she was qualified to be giving advisors some crucial AI advice on a Monday afternoon.

That's because despite her firm's crafting of health care planning software for RIAs, the majority of the tens of thousands of advisors Caribou serves say the reason they use the solution is because it creates a level of depth in client conversations they have been unable to achieve on their own. She believes that with the right approach, tools like ChatGPT can have a similar impact.

At Future Proof 2023, Simone gave financial pros a quick crash course on practical ways to leverage generative AI in a way that goes beyond cranking out prospect emails or timed client correspondence.

Scroll down to check out the biggest takeaways from her talk in Surf City.

Don't just hide AI in the back office

Simone said generative AI is the new talk of the town, and the topic of conversation for most advisory firms is successfully leveraging it for business use.

Unfortunately, many of the answers wealth managers receive don't fully live up to the tool's potential.

"It's the most powerful technology I think that we've ever had before. And yet, advisors are mostly hiding it in their back office, using it for administrative tasks or using it for marketing tasks," she said. "Whether that's note dictation, whether it's calendaring and scheduling, whether it's simplifying very complex financial topics, a lot of the power and opportunity of AI is hiding in your practice management. It's not in the forefront of your actual client experiences."

Simone said while all of those aforementioned applications of generative AI are essential to growing both productivity and profitability, the big question is what to do with the extra time provided by those solutions.

"Some of you might immediately think that you might use generative AI to market to the masses and acquire new customers," she said. "But you can actually use it for growth by going deeper with your existing clients. And it's going to have the same impact and is probably going to have an even bigger impact."

Specifically, Simone put a question on the screen that may make its way into an upcoming advisor-client interaction: Should I enroll in Medicare if I am still working past the age of 65?

"Whether your client comes to you or you go to them with this question, if you're an advisor in the audience, you probably jump to the immediate response of the answer being 'no.' If you have some Medicare knowledge, you might have said to yourself, they can enroll in Medicare Part A because it's free, but their employer can pick up the rest and they don't need to enroll in the rest of Medicare," she said. "Well, the answer is not wrong. It's not right for 100% of your clients. And this is one of the best examples of how you can now become an expert and offer personalized planning in an area that before you would have had to do a lot of research."

Simone then threw that question into ChatGPT, but the tool didn't give her an answer. Instead it told her to consider a number of different factors like the size of the employer, the coverage that's offered, the cost if the client is retiring soon and more.

This can help an advisor have a more robust conversation with a client that pairs that immediate "no" with more opportunities to connect.

"Do you remember back in school, specifically in math classes, where you'd be asked a question on a test? And then it would say show your work? And even if you got the answer right but you didn't show how you got there, you actually didn't get all of the points? You can think of leveraging generative AI in the exact same way," she said. "Your clients actually want to know that you are going to this level of depth and considering their entire context, all of their situation, and really going deep with them in an area where you might not be the expert."

Cut out the bias

In addition to making client conversations richer, Simone said context and considerations offered up by generative AI enable advisors to reduce any bias they have in an area of clients finances.

"Whether it's their investments, whether it's clearing related services, whatever it might be, I want to encourage you to use AI to reduce that bias that you might have even if you are a deep expert in that space," she said. "Have it check your thinking. Have it check your work. Have it lay out all the criteria that you might need to evaluate as you're helping clients make those decisions.

"Again, the answers themselves are not what's important. It's understanding what is important to your client. You will have clients faced with the exact same situations that might make different decisions."

Because emotions are so embedded in financial decisions, Simone said that the showing of work does more than just communicate to the client all of the possible outcomes.

It lets them know that you're really putting in the time and that you care about their goals as much as they do.

"Clients don't want you to know everything. They don't want you to jump to an immediate answer. They actually want to ensure that you are considering their full financial picture,"she said. "There are so many decisions in life that are more complicated than just a simple decision tree. I've tried to use some of those maps online where they bring you to an answer about health insurance or Medicare coverage, whatever it might be. But the truth is that clients could do that by themselves. That's not why they're working with you. So they want to know that you are guiding them through those decisions and considering that full context.

Build trust and be more human

As generative AI's star rises among advisors, it's also in demand from clients. Simone referenced a recent Morgan Stanley study that found that most investors believe AI will be revolutionary for financial services, with 72% saying that AI is a game changer for investors and traders.

Nearly 3 out of 4 (74%) believe the technology will help financial advisors better serve their clients, and 63% would be interested in working with a financial advisor that leverages it.

But investors do not expect AI to replace human advice. The study finds that 82% of respondents believe that will never happen, and nearly 9 out of 10 (88%) agree that the human-to-human financial advisor relationship is extremely important.

"What clients truly, truly want is they want to know that they can trust you, and they want to know that they can rely on you. And what AI really can do in terms of generating that level of trust is it can create that layer of depth in your conversations," Simone said. "You need to ask questions, you need to acknowledge negative emotions and you need to listen to your clients."

Simone then circled back to her Medicare question example, saying if an advisor immediately jumped to an answer, that hair trigger response may do more harm than good when it comes to building trust.

"What is actually trust building, and you can use generative AI to do this is, write out four questions for me that I can ask my client who is considering enrolling in Medicare while they're still working past the age of 65," she said. "Do you like the quality of your coverage offered through work? Have you done any research about Medicare on your own? What did your spouse do? What you're trying to do is you're actually trying to get them to say something like I'm confused, or this is so complicated to me, or I'm afraid about the quality of that coverage.

"You actually want to pull out negative emotion from them and have them be the ones to express that so that you can address it firsthand and listen to them. If you're not asking questions, there's nothing to listen to. If you're there with just a response, there isn't really a conversation actually happening."

She added that in clients who have a high trust in their advisors, 94% are likely to refer an advisor to a friend, making it the best way to grow.

But developing that high trust requires a lot of attention throughout the year, stating that it takes an estimated 19 touches to develop such a bond.

"You want to be checking in with them about something that is actually highly personalized to that and is not a generic email campaign that you've sent to your entire book of business," she said. "What AI is truly doing is it's giving us back more money and more time to be more human."