The life of a financial advisor is a bit like running a marathon with huge obstacles: between client meetings, research, compliance work and trying to grow your book of business, there's hardly a moment to catch your breath. So how can AI step in to help without turning you into a spectator in your own race? Apparently, it's more about giving you superpowers.
Artificial intelligence is not some distant sci-fi robot uprising. While generative AI has captured our attention over the past year, machine learning, a subset of AI, has been well established since the 1950s and has recently seen a resurgence as it is rapidly creating opportunities in the financial services industry, helping advisors to lead tasks, improve customer service and yes – find new leaders.
Predictive ML is commonly used by big tech and was used frequently when I worked at A9, Amazon's AI group. A common use case for this technology is to direct AI to sift through large amounts of data to determine items that may be of interest to shoppers. On the other hand, GenAI, popularized through OpenAI's ChatGPT and other chatbots, creates rich content or human-style responses when prompted.
Here are some ways that both types of AI can help financial services professionals in their day-to-day activities, today and in the near future.
Leader Generation and AI as your Always On Personal Assistant
The wealth management industry's core growth has been stagnant for years, fluctuating between 3% and 4% when you remove the impact of market fluctuations and mergers and acquisitions. This trend shows small sign backwith Chip Roame, founder and CEO of Tiburon Strategic Advisors, revealing that organic industry growth in 2022 was just 2.4%. He warns not to expect significant improvement. In order to continue to scale and do so at a faster pace, advisors must grow through AI-powered organic search.
Imagine if every time you sat down to pitch new leads, you had an assistant who never sleeps and could sift through trillions (yes, trillions) of dollars in global wealth looking for the right match. AI-powered lead generation tools do just that, and they're changing the game. With an estimated $100 trillion in global wealth creation in the next decade, and $80 trillion wealth transfers from baby boomers to millennialsthere are many opportunities waiting for you. Combine this with a generation of customers who are embracing digital financial services, your opportunities for growth are significant. In fact, Ficomm reported that 57% of those under 44 hired their financial advisor thanks to digital marketing. This is a marked change for an industry that historically relied on referrals. Artificial intelligence tools can help match you with these customers, considering prospects that are a good fit for your firm based on their financial needs.
Artificial intelligence can also help uncover bits of information that aren't obvious, providing opportunities for research that others haven't yet learned about. For example, AI can function as a geographic predictive tool, allowing advisors to target areas ripe for growth or to understand life events — such as marriages, job changes or home purchases — that may mean the individual is ready for a financial advisor.
Financial Planning and Portfolio Analysis
Meet Jane Smith. Jane is 48 years old, earns $150,000 a year, and needs $60,000 for her daughter's college tuition over the next four years. You won't have to spend days analyzing how to manage Jane's investments for this expense. Soon, AI will achieve this in moments. With a single request, your AI will identify which assets to sell or hold, maximizing tax advantages while preserving her retirement savings. AI will also be able to instantly simulate countless retirement scenarios. Gone is the time of waiting for in-house specialists to process requests. AI-powered tools will quickly generate everything from easy-to-understand Monte Carlo simulations to designing dream retirement scenarios for clients. This change will enable more meaningful conversations about finances and retirement planning options between advisors and clients as advisors will have more time to critically analyze data. We can expect this scenario to unfold in the near future through GenAI applications developed for and by the financial services industry. Large firms can integrate this planning capability into their systems, while smaller consulting firms can adopt third-party tools.
Customer service
Have you ever had a client ask, “What is happening in the market and how will it affect my portfolio?” Instead of contacting analysts who will spend days generating an answer, AI will soon give you consistent answers in real time. With artificial intelligence tools designed to analyze large data sets, you can provide clients with instant, data-driven advice that makes you seem like you're connected directly to the nerve center of Wall Street.
Large language models focused on financial services are specializing to give advisors access to a wealth of historical and current market data. When will these systems be fully deployed? Say goodbye to the dreaded “I'll get back to you on this.” You'll have the answers ready before your customer's coffee gets cold.
Administrative duties
Artificial intelligence and machine learning have the potential to revolutionize the back-office operations of financial advisory firms by making data a more dynamic and accessible asset. Using AI and ML, firms can automate and streamline tasks like scheduling appointments, freeing up human resources for more value-added activities. AI-driven analytics can quickly generate insights by responding to complex inputs about customer behavior, market trends, or internal performance metrics. This improves decision making across operations, compliance and customer management. AI's ability to continuously learn and adapt to new data ensures that financial advisory firms can stay ahead of client needs, regulatory requirements and operational inefficiencies, making their office not only more efficient, but also more intelligent.
Creating social media content
Social media marketing may not be every advisor's favorite task, but with AI, it doesn't have to be. GenAI tools can create timely social media posts, creating content that matches current market trends, while you focus on your customers. With just a few prompts, you'll have a polished LinkedIn post ready to go, and it can even go viral to reach new audiences (no promises though!).
The AI frontier: Where are we going?
Over the next few years, AI will become increasingly standard in every advisor's toolkit. This will help you find more leads, make financial planning more efficient, and give you the freedom to focus on what really matters: your customers.
But there is a caveat. With great power comes great responsibility—The wild west of data privacy is real, and ensuring your customers' data stays secure is essential. As AI tools evolve, ensuring compliance and data security will be just as important as the amazing services they provide. There will be an increasing number of entrants to the AI technology revolution, and just as many will come, many will go. Take your time to vet carefully and ensure that the firms you work with share the same customer obsession perspective that you do.
Satayan Mahajan is the CEO of Dataalign Advisoryan AI-enhanced platform that matches consumers with financial advisors.