What makes a good financial advisor?
A simple question to ask, but a complicated one to answer.
And you would imagine it would require someone with years of real-life experience to give an appropriate response. Someone who has either done the job long enough, or has worked with advisors extensively enough, to understand what separates the good from the bad.
But what if the answer came from an entity that's only a few weeks old, lives on the other side of a screen and has instant access to one of the industry's deepest knowledge wells?
Meet "Mo," Morningstar's generative artificial intelligence chatbot that went into beta late last week and is now available across the Morningstar Investor, Research Portal, Direct and Advisor Workstation platforms.
Mo is backed by the Morningstar Intelligence Engine, a platform that marries Morningstar's investment research library with the same Microsoft Azure OpenAI Service that powers ChatGPT.
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Clad in the classic business casual combo of a white-collared shirt peeking out from underneath a branded company sweater, Mo made his first major debut on stage during last month's Morningstar Investment Conference in Chicago alongside company CEO Kunal Kapoor.
Mo was the special guest during
"What should a financial advisor tell a prospective client about finding the right strategy among hundreds of thousands of investment options?
"How does Morningstar rate the ARK Innovation ETF, ARKK?"
"Which investors are good candidates for the tax benefits of direct indexing?"
But the back and forth began with the leader of the Chicago-based company known for its fund rankings, investing data and market research asking that very important question.
"What makes a good financial advisor?" Kapoor asked Mo.
"A good financial advisor should offer comprehensive financial and portfolio planning and have a broad range of expertise, including tax specialists, investors and estate planners," Mo said in response. "They should also have a certified financial planner credential and be able to add value to clients through their skills and advice. However, the level of fees and the investor's own skill level should also be considered.
"Ultimately, a good financial advisor will prioritize understanding of clients' goals and intentions and offer personalized advice and solutions."
Mo's delivery of the answer is going for light and likable, but some of the word choice shows that it is a work in process as far as coming off completely natural.
The entire vibe is very Jake from State Farm, but the insight is uniquely Morningstar. And there's a good reason for that.
When a user types a question into Mo, that question is routed to an engine built on a Morningstar database that stores embeddings from Morningstar content.
So when Mo receives a user's question, the Morningstar Intelligence Engine identifies the most responsive content to feed OpenAI's large language model and construct a response. The response is then tested for relevance and responsiveness before being fed back to the user.
Morningstar officials chose to work with Microsoft's Azure OpenAI Service because of Microsoft's commitment not to allow user data to train the OpenAI large language model. And in keeping with Morningstar's commitment to privacy, users are instructed not to input personal or confidential information into Mo.
James Rhodes, Morningstar's chief technology officer and president of its Data, Research, and Enterprise Solutions unit told Financial Planning in an interview that Mo's ability to forget as effortlessly as he can recall should be noted.
But the bad memory that comes with Mo's vast knowledge is an intentional character flaw.
"Every chat you have with it's a new one. And the reason we do that is actually for security and privacy. So we don't associate questions with the users," Rhodes explained. "We want people to feel comfortable asking all types of questions. And we don't want users to think that we're tracking the fact that (someone) asked about X, Y and Z. That information is only there when you ask it, and then it disappears."
It's a surprising approach considering the current software landscape being awash with apps that pride themselves on the fact that they remember everything little thing as a means to provide a more robust experience.
Rhodes said instead of tracking users and the questions they ask, Morningstar is keeping tabs on the responses Mo gives to verify responsiveness and accuracy. And the company believes that Mo's ability to provide quick insight is needed now more than ever.
Officials said investors face an overwhelming amount of information and a "growing sea" of more than 750,000 investment options. They believe large language models and other AI tools can make breaking down all of those options dramatically easier.
Instead of working with keyword searches and pages of results that may not have not been properly vetted, Morningstar customers can ask questions directly to Mo and receive a concise response within a matter of seconds.
However, Rhodes also makes it clear that "Mo don't know financial advice." The company makes it clear that Mo does not provide investment advice, so don't bother asking.
He also isn't gunning for the jobs of financial advisors. So feel free to invite him to your next client meeting.
"Mo is not automated investment advice. Mo is a tool to provide advisors with access to quickly summarize content and research perspectives so they can be more effective and efficient in their jobs," he said. "But we have no desire to build a 'robo-Mo.'"
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Rhodes said reception for the digital avatar and voice-recognizing representation of Mo at the Morningstar Conference was warm and is still heating up. Conference attendees asked Mo more than 1,000 questions on investing terms, saving for retirement, Morningstar ratings for specific securities, Morningstar's take on emerging asset classes and various market outlooks.
And when speaking to Financial Planning on Friday, Rhodes said he believes the number of questions submitted to Mo thus far may have already surpassed 10,000.
"You can even see the increase in volume of clicks per user and questions per user coming in. I know we've only had a week to look at it … and it's actually fairly evenly divided between the individual investors going through the investor product as well as the professional product," Rhodes said. "The interest level in understanding the technology and the offering is actually fairly incredible and has dominated the conversations around the future of the space, how we see the technology evolving and just general interests on how the system was set up and how it all works."
Rhodes also sees huge potential in AI's ability to support a better investor experience at scale, but we're really just beginning to scratch the surface of what's possible.
Mo is the first of several applications planned to be built on the Morningstar Intelligence Engine platform, and Mo himself will grow over time.
After all, he's only five weeks old. Imagine what he'll be up to when he hits 10 weeks.
But Rhodes is in no rush to see Mo grow up too fast. He again stresses the responsibility and safety aspect of developing new technology rooted in generative AI that aims to deliver a near-human experience.
It's something that has taken center stage in the minds of many
"I've seen so many things trying to capitalize on the hype cycle. And I'm not sure everybody does it in a responsible way. And it's super important, from my perspective, that this isn't just a rush to get your name out," Rhodes said. "You need to think about your clients, and you need to think about their data, and the security and privacy of it. And you need to implement all this with great responsibility."
