Home etfexpress.com AI is reshaping wealth management with an increasing influence on its processes

AI is reshaping wealth management with an increasing influence on its processes

In a changing financial landscape AI is at the forefront of revolutionising how wealth is being managed and invested.

There are many avenues where AI is having a growing impact on the wealth management industry, such as predictive analysis as the tools available can process huge amounts of data which enables managers to make more informed and quicker decisions.

AI algorithms are also effective over risk management, where historical data alongside market fluctuations’ and patterns can be detected and also predicted.

Personalised financial planning is also an area where AI is a significant cutting edge technology, as a client’s profile can be analysed reviewing what the investment objectives are with the benefit of mountains of market data.

AI is also creating other channels of communication such as chatbots, and also speeding up the client process where agents can respond to any customer enquiries at a faster pace.

Mercer has compiled a survey this year on AI and wealth management, and found that 54 per cent of managers are currently using AI technology, and a further 37 per cent are planning to use AI.

The study also revealed that more than half of AI-integrated investment teams report that AI analysis informs rather than settles any final investment decisions.

Looking ahead the managers who responded in the survey expect that AI will deliver positive economic benefits, although divergent regulation is regarded as a potential risk.

Greg Davies, the head of behavioural finance at Oxford Risk, says: “Being clear on what machines are good at and what humans are good at is key to an effective division of labour.”

“If a job involves data processing, pattern recognition, consistency and low-error rates, it’s the place for a robot.”

“If it involves empathy, unstructured problems, creativity, coping with dynamic environments and multiple objectives, and generating insights from association across completely different problems, it’s the place for a human.”

Sal Cucchiara, the chief information officer for Morgan Stanley Wealth Management, says: “To be clear, we have not deployed generative AI use cases to analyse the markets and/or create investment strategies.  For us, our use cases keep the human very much in control.”

“So, we began with a use case that could help empower our advisors, the AI @ Morgan Stanley Assistant, which found a way to help them surface actionable information more efficiently from our vast database of intellectual capital, saving time and energy.”

“And importantly, this use case does not access any client PII nor make recommendations, instead, it synthesises our internal research in a digestible way.”

“Ultimately AI is streamlining day-to-day, administrative tasks for our advisors, which translates into more time spent with their clients.”

Feedback from financial advisers have shown that the AI @ Morgan Stanley Assistant has had significant increases in accuracy, coupled with significant decreases in incomplete answers, when compared with the previous knowledge management process.

Issues such as regulatory and transparency do raise questions over how the wealth management industry approaches the growing influence of AI.

An AI system that picked solutions probabilistically, and which potentially evolve over time to provide unpredictably different solutions for the same client characteristics, would be a compliance nightmare, and potentially dangerous for the client, according to Oxford Risk.

Cucchiara says: “It’s important to underscore that the AI @ Morgan Stanley Assistant works only with internal Morgan Stanley content.”

“And the experience we’ve rolled out helps solve for that, in that the user sees justifications for the answers, coupled with links to source documents.”

“Further, our solution is control-forward.”

“We work hand in hand with our control partners to ensure that legal, risk, and compliance considerations are accounted for.”

newETFs.io respects the hard work of others and gives all credit to the remarkable folks at ETFexpress.com. This excerpt/article was pulled from their RSS feed; click here to view the original. Please note that on occasion, the RSS feed will not have the author. When this happens this site defaults the author to "News". Make no mistake, this excerpt/article was not created by newETFs.io, it was simply shared with you.