Artificial intelligence has the potential to forever change financial services. And now more than ever, advisors seem ready to move in lockstep with the shift.
The attitudes, opportunities and barriers related to AI in wealth management were the focus of recently published research from consulting firm
What they found was an overwhelming enthusiasm and readiness for the still-burgeoning technology as almost all of the surveyed advisors crave AI solutions, and are already using AI to some extent.
About 83% of advisors interviewed said they believe AI will have a direct, measurable and consistent impact on the client-advisor relationship in the next 18 months. That same percentage of advisors also said they believe AI can achieve a level of sophisticated advice and planning that will ultimately leave them competing with an algorithm for clients in the next 18 months.
Fifty-five percent of advisors interviewed believe to a great extent that AI will have either a transformative or revolutionary effect on the future of financial advice within the next three years, and 92% acknowledge that their firms have taken steps to act on their AI strategies.
Scott Reddel, North American wealth management lead for Accenture, told Financial Planning that firms today have a better understanding of AI and more sophisticated means of rolling it out so advisors can more quickly gain value from it. He believes the industry has also improved in terms of “right use cases” and focusing on exactly where and how AI can fit into their business models.
“I think these firms have gotten smarter about how they're branding these things to advisors. I think the story resonates a little more now,” Reddel said. “It's not a ‘replace advisors’ solution. It's enhancing and enabling you to provide better human-led advice the way that you want.”
The warm reception toward AI is growing stronger in 2022, but wealth management decision-makers seemed poised to pounce on the tech way back in the pre-pandemic era.
In a survey Accenture conducted two years ago, they found that 79% of North American C-suite executives in the wealth management industry believed their organizations were “digitally ready” to adopt new AI tools, while six in 10 were already focused on deploying AI technology across targeted business groups.
Reddel said just a few years ago there was belief in AI, but also plenty of hesitancy and questions about its ability to truly change the landscape. But that hesitancy began to wane as more practical applications of the technology came to market.
“I draw the analogy to digital and robo-advice. When that first launched, every firm and wirehouse first kind of looked at that and said ‘we can't do this because our advisors will get upset and we can't cannibalize,’” he said. “And then it quickly pivoted … so that shift has kind of now started to happen with AI.”
The statistics demonstrate a high level of agreement among advisors and executives, and Accenture’s survey points out that this is a “somewhat unique scenario when it comes to implementing a new technology to find shared beliefs and interests among key stakeholders who are equally willing to transform their work practices and learn how to use a new technology in the most productive ways.”
But challenges remain. For example, five out of 10 advisors feel like their firms are challenged to act on their AI vision. Reddel said Accenture works with firms to help them understand that moving to an AI and data-driven strategy requires a mind and culture shift as well.
Yelena Melamed, co-founder and head of product at
By using institutional data partners and analysis of more than 100,000 successful lead conversions, Cathlight’s tech can find leads who are most likely to need an advisor's guidance.
Catchlight’s analytics let advisors pair information with action, and Melamed says that’s where the power of AI goes from a high-level concept to something tangible and exciting.
“There's a lot more engagement from advisors and leaning in from advisors now,” she said. “Perhaps it's better understanding of AI. Perhaps it's just realizing the luxuries of better markets are behind us. And to really be efficient in the market that's yet to come, you have to revisit how you might have built your workflow in the past.”
Melamed said advisors in today’s market are hungry for meaning behind the data they’ve seen on AI for years and how they can act on it. In Catchlight’s case, data is used to streamline prospecting by helping advisors quickly identify which leads to pitch and how to best engage them.
She adds that every AI-facilitated first meeting between client and advisor is more meaningful because so many early steps of traditional prospecting have been skipped.
“They realize that this is a person that they want to converse with, and this is someone who may be interested in and value their advice. They're not kicking tires. They're not wasting each other's time,” Melamed said. “That's a huge value add just from an efficiency standpoint, and they can engage personally a lot quicker.”
Melamed said it's also a boon for firms fighting to capture attention in an increasingly competitive, digital-first market where client-advisor pairings are no longer constrained by geography.
“It makes you not just more effective. It also makes you stand apart from the competition because you are engaging in a personal manner. How many (financial service) emails do all of us get that look very constantly the same? I tend to get a lot … and they just get me all wrong,” Melamed said. “A couple of data points that Catchlight can provide will make them that much more effective because it's all about the eyeballs, and it's all about the quality of the communication.”
To prepare a more seamless AI tech rollout, Accenture recommends multidisciplinary teams be created by firms and tasked with implementation. A “smart deployment” model can keep a firm’s pace of innovation using AI in relation to the rate of adoption in step, avoiding inconsistency and headaches. Multidisciplinary, in-house teams are also likely to be more familiar with these specifics, making them best suited to manage this work.
The Accenture study also identified three critical factors to help improve a wealth management firm’s ability to scale, overcome roadblocks and help organizations realize AI’s full potential.
First, firms should focus on seeing a single use case or program through to the end. “Aim for an approach driven by a clearly defined business strategy, not by the technology,” the study says. Accenture warns that too many pilot or work-in-progress initiatives can lead to confusion and frustration.
Next, ensure the firm's priorities align with where advisors find high value. Keeping financial advisors in the loop can ease an AI adoption process that requires a high amount of change and effort.
And third, maintain continued support from management to ensure the success of AI programs. Accenture finds that executive sponsorship is critical to set the tone at the top and ensure the internal capacity, funding and dedication is sufficient to meet AI goals.
“This sends a powerful signal that successfully scaling AI requires an operating model with defined processes and owners for measuring value, appropriate levels of funding and established executive support,” said a statement from Accenture.
