What would you do if your client called to ask about a mutual fund that is predicted to underperform similar funds by 3%? How would you react? How would this interaction affect your relationship with the customer?
According to a report by American Century Investments, approx 40% of American investors say they will forgo some returns in order to have a positive impact on society or the environment; as such, you would probably be willing to listen to the client if she was asking about a sustainable investment fund. Two-thirds of investors in that group report that they would be willing to sacrifice up to 10% of returns to make a positive impact, so you may be more open to the fact that the fund can make a real difference in the fight against climate change, or any other cause your customer supports. In that case, the call can make you feel like you and your client are on the same page—that she understands you're willing to look for investment opportunities that match her values.
Of course, your reaction may be very different if you're skeptical about impact or sustainable investing and prefer to take a deeper approach to your portfolio. In that case, your skepticism may start to rub off on your customer.
Financial advisors face this type of scenario every day. If an advisor can proactively determine the issues most important to a customer and engage that customer with relevant information, conversations, and product recommendations, she can create opportunities to strengthen, and perhaps even expand, the relationship. On the other hand, at a time when investors have instant access to massive amounts of information and the ability to more easily manage their own portfolios, advisors who present generic or misguided ideas and recommendations will quickly outlive their usefulness.
In this regard, artificial intelligence can be a superpower for advisors. New AI applications help advisors learn about their clients and personalize information, product recommendations and many other aspects of the advisor-client relationship. In fact, some of the most sophisticated AI platforms actually automate much of this process, allowing advisors to personalize service and communications across an entire portfolio of clients.
The Power of Personalization
AI-assisted personalization can begin before the customer signs. Advisors today have access to research tools that use AI to analyze the universe of potential clients by a variety of useful categories, including life cycle (just getting married, trying to buy a house, saving for college, preparing for retirement, etc.), interests or values (running a business, the environment, travel, philanthropy, etc.) and even the preferred communication channel (text, email, phone, etc.). Armed with this data, advisors can tailor their outreach and initial advice to the perfect specifications for each prospect. Similarly, AI is helping investors search for professionals by matching them with advisors who are a good match for specific financial expertise, values and other criteria, fostering more meaningful and productive advisor-client relationships.
Once a client is on board, advisors can use the same type of technology to ensure they keep up with changing needs and interests. There are many ways wealth managers can collect data about clients. Some AI-driven customer service platforms use short surveys asking new customers to provide information that can help the advisor shape their plans. Other apps go even deeper – with the customer's permission. AI tools can monitor the content customers engage with online and on social media to create a real-time view of what they're reading and listening to. This technology allows counselors to change their approaches as client needs and interests evolve, and can alert counselors to any major life changes such as the birth of a child, job loss, or divorce.
Applying artificial intelligence to maximize personalization enables advisors to quickly see not only which research report to send to a client based on their portfolio, but can automate a series of notifications to address everything from reminders related to account to the important moments and life events that customers need to consider in their financial statement. From the birth of a grandchild, high school graduation, tailored financial education for college preparation, to advising clients on an upcoming proxy vote for a company they own on a climate policy or rights measure animals — staying ahead of these key moments shows the deep commitment advisors have to their clients and what they value most.
All of these AI-powered reminders, communications, and educational materials enable advisors to regularly connect with clients at exactly the right moments with the most important information and engage in deeper conversations about what's going on and how they can help.
Advice that reflects values
AI is also making investment recommendations more valuable to both clients and advisors. Many wealth managers today offer platforms that allow clients to aggregate all their accounts into one system, including banks, retirement accounts and investments. This gives advisors a 360-degree view of their clients' financial situation and activities. AI tools can analyze transactions from all these accounts to produce insights that can be shared with customers. They can also produce highly personalized investment advice and product recommendations that are tailored to address the client's current needs and consistent with the types of strategies, products and risk levels that the client has historically preferred.
These capabilities enable advisors to provide an unprecedented level of personalized service that would have been impossible just a few years ago. The transformation has come at just the right time for advisers. In an age of do-it-yourself investing, AI-driven personalization can dramatically increase the value a financial advisor can provide.
Personalization is becoming even more important as advisors work to create and maintain relationships with a new generation of investors. In the United States, we are in the midst of one of the largest transfers of wealth in history, as young investors inherit trillions of dollars from baby boomers. These young investors are passionate about their values and have a clear preference for doing business with companies that share these values and an advisor who understands the importance. AI provides a seamless and efficient way for advisors to share relevant educational content with this new generation, making complex financial concepts more accessible and engaging.
Thanks to AI, financial advisors will be able to understand what new investors and other clients value most and reflect those values in their advice – even if that means forgoing investment returns for help fight climate change.
Mike Alexander is President, Wealth Management and Global Managed Services at Broadridge
Alicia Rich is the Chief Client and Digital Enablement Consultant at Broadridge