Artificial intelligence is expected to transform the way companies do business, including financial planning and investment management. This means financial advisors need to get involved or risk being left behind. “They need to realize that an AI apocalypse is coming,” said Craig Iskowitz, CEO and founder of Ezra Group, a strategy consulting firm for asset managers and broker-dealers. Of course, financial advisors have been using certain technologies, like financial planning software, for years. Others are now adopting AI to facilitate operational workflows, such as meeting summaries and emails. Still, experts expect a sea change as AI eventually becomes more ingrained in the everyday investing process. “Large language models, such as OpenAI’s GPT and Anthropic’s Claude, can generate significant productivity gains because they can process large amounts of textual data, such as annual reports, debt documents, news articles or broker searches, much faster than humans,” Vincent Gudsdorf, head of AI analytics and digital finance research at Moody’s Ratings, wrote in a report earlier this month -this. “These templates can automate the creation of documents such as earnings reports or market commentary and generate investment ideas,” he added. Right now, AI is still in its infancy while infrastructure is being built, said Leo Kelly, founder and CEO of private wealth advisory firm Verdence. His company manages just under $4 billion in assets. “There are applications but they are very rudimentary and people don’t yet know how to use them,” he says. Those he calls “deniers,” who don’t want to adopt AI, will do well at first, Kelly said. But “the light at the end of the tunnel is a freight train (aiming) towards them.” There are also early adopters, who may be rushing into the technology and might see challenges ahead, and those who are thinking strategically and developing their technology, he said. The latter will be the most successful, said Kelly, whose company is currently rebuilding its technology stack. “Basically, we get our hands on our data, organize it and structure it so that it’s clear and precise,” he said. “Then you can use AI and start applying applications and those applications will be very effective if you took your time.” This is a massive commitment, he stressed. “The benefits will be enormous if you do things right,” he added. AI’s ‘wealth whisperers’ Eventually, regulators will get a hold of AI and understand that data is protected, predicts certified financial planner Timothy Welsh, president of wealth management consultancy Nexus Strategy. Then the investor conversation will shift from “who is your fund manager” to “what AI are you using?” he said. “If you think about creating an asset allocation and selecting stocks, bonds (and) mutual funds…(financial advisors) rely on information from asset managers from all over the world,” he said. “But this research is the critical piece where AI can do more than humans.” However, AI will help financial advisors do their jobs better – without putting them out of work. Welsh envisions advisors having more time to talk with their clients. “A therapist thing,” he said. “These skills are much more in demand.” AI tools can also significantly improve background searches, data analysis, portfolio analysis and risk analysis for financial professionals, Kelly said. “They can get all this work done a lot faster than before,” he said. “They can collect more data and make better decisions.” The Ezra Group’s Iskowitz sees AI leveling the playing field in what he calls the “democratization of EQ” or emotional intelligence. All the data now available on the Internet, such as posts on social networks, will help advisors know their clients better and therefore communicate better, he predicts. “The real golden ticket will be collecting terabytes of data, sorting it intelligently and finding pattern matches,” he said. “It’s called machine learning, but it’s much faster and on much more unstructured data…emails, notes, social media, posts, videos than AI can quickly review, then explore and distill the exact information for each potential customer.” AI can also help managers analyze which customers to pursue and how to talk to them based on their background, he said. In about two years, Iskowitz predicts, a chatbot will be able to provide comprehensive financial plans directly to customers, interact with them and give them the ability to open accounts with the click of a mouse. “(It) will do all the work for you, put you in the right patterns, adjust everything and off you go,” he said. “These AIs are going to be like wealth whisperers.” What to do Nexus Strategy’s Welsh says financial advisors should start familiarizing themselves with AI’s current capabilities. “Start today. This is something you can anticipate,” he said. “Just keep it in the box for now – operational efficiency. No problem with that.” For Kelly de Verdence, the first thing advisors should do is ask themselves who they are: an early adopter, a denier, or a strategic thinker. “Don’t try to fool yourself with that answer,” he said. “If you want to change things, you have to change.” They should then assess where they stand in the market – what their competitive advantages and disadvantages are. After that, decide whether you should invest in people and technology, partner with a bigger company, or if you are working in a big bank, decide if you want to leave, because big banks also have to manage risks and risks. capabilities of these. AI tools, he said. Those who run small family businesses managing their own portfolios should start thinking about partnering with a larger financial advisory firm or technology company, Kelly said. Otherwise, “AI is going to lose you money,” he said. Iskowitz suggests advisors branch out and also address areas such as alternative investments, tax and estate planning, more advanced retirement planning, insurance and annuities. They can also use more visual tools, like an asset map that helps visualize a client’s financial life, he said. Advisors should have regular conversations with their technology providers, who are already working hard to deploy AI capabilities, he advises. “Don’t go buy something new. It’s already happening to you. Wait,” he said. “Your financial planning software launches an AI feature. Your meeting planning tools launches a feature.” Also be sure to train your internal staff and let them know that no one will be laid off, he advised. Anyone whose job is replaced can be transferred elsewhere in the company, he said. “It’s a learning curve. As with any software, you have to spend time training your staff and training them in the way that works for them,” he said. “AI can help.”
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