For some advisors, the promise of AI's ability to reshape wealth management is an abstract idea of the future not yet fully realized.
But for others, that promise is already being put into practice. And it's a powerful ally for top performers who want to continue pulling away from the pack.
"It's everywhere in what we are using all day long. You don't have to think much farther than how Uber drivers are deciding where to go to anticipate demand from people who are using the ride-hailing app. Or spam filters … deciding what is spam and what to not send into your inbox," said Andrew Altfest, president of New York-based RIA
"If you know the use cases for AI … they're tremendous. And I think it gets to where the opportunities are today for all of us to be doing (more) and helping clients more than we are without spending a lot more time."
Last week, Alfest and
In a conversation led by financial services
Altfest and Bruckenstein said modern clients have a demand for advanced planning, but the ability to provide these services at scale is growing more difficult as that demand — and client expectation — rises.
Doing it right takes time, knowledge and resources. But AI-supported tools have the power to eliminate manual processes and give advisors time back so they can spend it actually administering advice on matters like estate planning, retirement planning and investment management.
"I've been saying for years that investment management is table stakes, and it's a commodity, and we got a lot of pushback from the industry. But I think you're really starting to see that the market appreciates that and understands that," Bruckenstein. "If you're just doing retirement planning and investment planning, you're competing, like Andrew said, against basically everybody in the industry. But if you're doing these value-added services and you can do them at scale, right now there's very few firms in the industry that are really doing that. So I do think it's a tremendous, tremendous advantage."
Naturally, no AI conversation can be had in 2023 without a discussion about ChatGPT, the AI-driven text generator that has gone viral and sparked debates on social media about how it may
Siracuse noted the mindshare the innovation is gaining among those inside and outside of the industry, and wondered how it may shake things up.
For Bruckenstein, it's all about understanding what the tool and others like are, and aren't, good for.
"It's really demonstrating to a lot of people who didn't get it what some of the true potential of AI is," he said, noting that business-focused AI has been around in some shape or form for years, but has had a bigger presence in the call center space as opposed to the financial advisor space.
He said early adopters of AI were trying to substitute computer learning for some of the people at call centers toroute calls more effectively. Over time, the tech was leveraged to support and improve the familiar customer service numbers that push you to an AI-powered "operator" that does its best to replicate talking to a real person.
"I think there's a lot farther in our industry for that to go. I think a lot of what I would call routine questions that advisors answer today can be answered either with a phone call or through a chatbot, and I think every advisor a few years from now will have that capability built into their website," Bruckenstein said. "So if a client calls up and says 'I'm getting ready to make, for example, my IRA contribution. Should I put it in a Roth or a traditional IRA,' it'll actually know enough about the client to be able to tell them without having to actually engage with an advisor."
Siracuse then shifted the conversation to personalization, saying it is a top-of-mind topic for firms focused on growth in 2023. Altfest said the world advisors operate in today is one of mass customization, and advisors need to help everyone from the retiree who has an estate planning concern to the early-career professional who is putting together their first financial plan.
"The way to actually provide these services is by using technology to actually scale. And to just give you a recent example of what's on our mind,
From there, the advisor can customize further by using the tool to peek into the potential future of that client and run a number of scenarios to determine the best plan of action, Altfest said.
A change in tax bracket. A move to a new state. A divorce. AI can help advisors navigate that shift in a client's life well before it even becomes a possibility "irl."
Bruckenstein added that the next iterations of AI-backed solutions will be smart enough to analyze the impact of something like SECURE 2.0, identify the clients advisors should be talking to first; and provide support on how to best engage them.
"I think that's only a few years away. And that's really exciting as well, because again, it'll allow them to personalize the service," Bruckenstein said. "But do it at scale (and) not have to go through their client base and say, OK, who do we need to talk to here?' It'll already be right in front of them."
Artificial intelligence has regularly topped the list when advisors weigh in the kind of technologies they believe will have a major positive impact on the way they do business.
That same percentage of advisors also said they believe that AI can achieve a level of sophisticated advice and planning that will ultimately leave them competing with an algorithm for clients within the next 18 months.
And this week, Broadridge's
