Morgan Stanley is furthering its early lead in the adoption of AI technology in wealth management with its appointment of a head of firmwide artificial intelligence.
Jeff McMillan, with Morgan Stanley since 2009, will lead the firm's AI endeavors after overseeing analytics, data and innovation for its star wealth management unit, according to an internal memo. Morgan Stanley was
That system, which is capable of producing long passages of astonishingly readable and articulate text, became the center of almost every tech-related discussion not long after its release in November 2022. By March of the following year, Morgan Stanley released plans to use OpenAI's GPT-4, a slightly more advanced version of ChatGPT, to help its advisors do their jobs.
Specifically, Morgan said it would start feeding its voluminous stores of market research, analyst notes and similar documents into the GPT. If advisors wanted to consult the firm's data for an answer to a specific question, they could pose their queries directly to the bot.
The responses provided would be "easily digestible," according to a Morgan Stanley press release at the time, and save advisors the time needed to do the digging on their own.
"It will be like having our Chief Investment Strategist, Chief Global Economist and Global Equities Strategist on call for every Financial Advisor 24/7," Jeff McMillan, who couldn't be reached for comment, said in the release.
Although Morgan Stanley may have been one of the first to embrace the promise of ChatGPT and similar systems, it's not the only firm to do so. Its rival
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Hovig Melkonian, the senior director of compliance at the technology and regulatory consultant COMPLY, said many of the uses of AI he has seen so far are along the lines of what Morgan Stanley is doing. When it comes to
Firms do similar things with their marketing and advertising on social media and other forums, Melkonian said. Advisors have been on notice since the Securities and Exchange Commission's adoption of a
Similar care is needed with emails, text messages and other communications advisors send to each other and clients. AI, Melkonian said, can play a role in scanning all of that material for red flags requiring the attention of internal compliance officers.
"What I'm seeing is more or less using the AI's ability to analyze large volumes of data, including market trends, news articles that could be on regulatory filings or client transactions," he said. "And then, from a compliance perspective, this helps identify potential compliance risks by using these machine learning algorithms."
One use Melkonian has not seen many advisors putting AI to yet, he said, is to help with portfolio selections. Some of that stems from a reluctance to give up proprietary knowledge and techniques.
Many firms are wary of feeding their trading algorithms and strategies into a large public system like ChatGPT, where they might be absorbed and later benefit rivals. Advisors, Melkonian said, also don't want to go anywhere near putting clients' private data into a publicly accessible bot.
Melkonian said he expects some in the industry at least to grow more comfortable with the idea of using AI to aid in portfolio construction.
"For those advisors who do have trading algorithms that may be more public or that are not proprietary, it could make sense to put them into these AI machines just to see what information is going to be outputted," Melkonian said.
Another common use, he said, is simply to have AI systems make transcripts of discussions at business gatherings or during meetings with clients and also provide a summary of what was said. Morgan Stanley is already moving along those lines as well.
"It can listen to the conversation, summarize the key points, and pop up an email that tells the client what the next steps are," he said. "The advisor then approves it, clicks 'send' and it updates the notes."
Finn said he thinks the firm's artificial intelligence systems, which he called AI@MS, eventually will find a permanent place sitting between clients and advisors. It, he said, will make "everything more seamless by using just a command prompt. Or ultimately, you'll be able to use just your voice."
"You can do things like put together a proposal, rebalance a portfolio, move money, create an infinitely detailed performance report instantaneously, and AI@MS will take care of all of that," Finn said. "All of that is on the way."
In his new role overseeing AI at Morgan Stanley, McMillan will report to the firm co-presidents Andy Saperstein and Dan Simkowitz. He'll also work closely with Mike Pizzi, the head of U.S. banks and technology; Sid Visentini, the head of firm strategy; and Katy Huberty, the head of global research. McMillan and Huberty will both oversee a Firmwide AI Steering Group.
McMillan, according to the memo, "will partner with the businesses and infrastructure areas to identify and prioritize AI opportunities, continue to place the Firm within the flow of AI development across the industry and help maintain Morgan Stanley's position of leadership as an innovator in AI."
