There's a rapidly growing number of tech options for advisors as AI has helped expand the marketplace. But even the top leaders in tech developments caution advisors not to dive in over fear of being left behind.
"Advisors should be very careful looking at the solutions that are pushed to them. Some of them make sense," said Cristophe Gauthron, CEO of Kwanti, a digital portfolio analytics provider based in San Francisco. "But a lot of them make absolutely no sense."
Gauthron was speaking at a roundtable of leading wealthtech providers and consultants at a meeting at Financial Planning's headquarters in New York on Sept. 6. The roundtable also included executives at wealthtech provider Advyzon, wealth management consultant The Oasis Group and software engineering firm Softlab 360.
The discussion focused on the ways in which AI could be a solution to the most common problems for advisors. But it quickly turned to concerns that AI could inadvertently become a problem, rather than the solution, for advisors racing to adopt AI tools.
"Overall, it's still in the hype phase. It's [AI] in my mind, a solution in search of a problem," Gauthron said. "But the problem for most advisors No. 1 is, 'How do I grow my firm? How do I get more clients?' And I don't see AI being helpful yet on that No. 1 pain point."
Even as head of a data-driven analytics company that's experimenting with AI labs, Gauthron said, "I'm not a full believer in AI, and I think advisors should be careful."
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Henry Zelikovsky, CEO of Softlab 360, said AI tools should be experimented with to determine "what it means to you" but "jumping in would be too much.
"If you can have incremental value: Somebody showing you what that means to you, and sitting with you, pointing out how that might be beneficial . . . if the results are showing enough for you to say, 'let's try it in six months.' But in the next six months, you [might] continue trying," he said. "I wouldn't say, turn on the button, put it on your website or engage with your product."
The proceed-with-caution sentiment by tech leaders mirrors recent surveys of asset managers in which 54% said they currently use or plan to use AI within the next 12 months, according to a new Cerulli report. And KPMG recently found that while 65% of asset managers said they were beginning to adopt AI, 60% also said they have not fully embraced AI due to the risk of data integrity, statistical validity and model accuracy.
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How advisors can find the right AI tools
There are, however, some AI tools that Gauthron and other leaders at the table were more comfortable with, such as AI-backed note takers and dictation services.
"Implementing something like a note taker, getting educated on a note taker, really doing due diligence and using it is going to give people experience with AI," said John O'Connell, founder and CEO of The Oasis Group. "And hopefully, [this gives] a little bit of an education about 'where is my data? What's happening with this? How good are these notes?'"
Tech leaders suggested that advisors ensure something as simple as a dictation service is not running on an OpenAI-type large language model, like ChatGPT, where the data can be shared with the company providing that service and potentially its vendors.
"Everyone should be aware of where they're putting their client data. It's called OpenAI, because it's open," said John Mackowiak, chief revenue officer of Advyzon, a fully integrated wealthtech firm that builds all its advisor tech internally.
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"These tools are out there that are cool, but everyone should take an extra step and ask, 'What's under the hood? How's my data protected,'" he said. "And make sure that sensitive client data in particular — which is what most financial advisors are going to be working with by definition — be careful where you're putting it."
O'Connell said there are AI note-taking tools built for the wealth management industry, like Zeplyn and Jump, that obfuscate the data, or mask it, before it's sent to a large language model AI.
"You've got to use the right tool for the right job," he said. "So I agree with John [Mackowiak], and advisors are not asking the right questions around that."
