Robots and artificial intelligence (AI) are now evolving a wide range of industries, including manufacturing, retail, and service provision. Since automated technology adoption is increasing at a rate of 20% each year and will eliminate nearly half of current employment in the next 20 years, this technical transition is disrupting existing job market and labour values.
The purpose behind the drive
It's not just the Fintech industry that's affected. We're seeing an increase in demand for AI and machine learning applications across nearly all sectors. The world of Fintech is changing at a pace that has never been seen before.
How AI is Impacting Wealth Management
When considering the application of AI in finance, many jump straight to high-frequency trading. Computer algorithms, armed with reams of the latest financial data, rapidly trade securities at fractions of a second. Investment firms have long adopted technology to trade at a dizzying pace where a millisecond can equate to millions of dollars.
However, there is more to the relationship between AI and finance than just trade. Artificial intelligence (AI) technologies have the potential to completely disrupt the financial advisory/wealth management market. A financial consulting company, like any other business, is made up of staff, procedures, and technologies. By leveraging AI in wealth management, one can integrate these elements to provide the best client experience. AI helps businesses be more flexible and attentive to customer demands by automating repetitive activities.
Whether AI replaces human involvement in wealth management remains to be seen. At this time, AI has shown its superiority in analysing large amounts of data and identifying patterns. However, it’s yet to be seen if AI can reach a level to replace the human element in wealth management. It’s the “soft” skills, or ability to see past the raw data when evaluating investment opportunities, what separates the great investors from the rest.
Now we will take a look at a few ways of using AI in wealth management that can help financial advisory firms better manage themselves and their clients’ money:
Quick Client Set-up
In finance, artificial intelligence (AI) can provide the catalyst needed to intelligently automate those procedures and speed up client on-boarding. For investment services, this exercise can start with automating and streamlining clearly defined manual on-boarding processes, such as initial communications, document verification, anti-money laundering checks, risk profiling, and all the legal documentation in between.
Being Transparent and Firm
Wealth managers/financial planners must reevaluate their company functions and provide appropriate messaging to give clients greater input and leverage over their accounts and investments in order to maintain and acquire the trust of top clients.
With AI finance, firms can use AI systems to support advisory services, enabling a higher quality of advice at a significantly lower cost to the firm. Routine tasks can be handled by AI systems, freeing up wealth managers to focus on higher-level investment strategies.
Superior Portfolio Management
There are many ways companies can get started with implementing AI in portfolio management. Previously, portfolio optimisation depended on wealth managers themselves, who can’t possibly perform an exhaustive evaluation of all data sources even with an infinite timeline. With portfolios more actively managed and optimised with a data-centric approach, clients don’t have to worry about sudden changes or unresponsive money managers limiting their returns.