The ‘AI apocalypse’ is coming to invest. How financial advisors can prepare
Artificial intelligence is expected to change the way companies do business, including financial planning and investment management. That means financial advisors need to get on board or risk being left behind. “They have to realize that the AI apocalypse is coming,” said Craig Iskowitz, CEO and founder of the Ezra Group, a strategy firm for asset managers and brokers. Of course, financial advisors have been using certain technologies, such as financial planning software, for years. Others are now embracing AI to help with workflows, such as summarizing meetings and emails. However experts are expecting a big change as AI eventually permeates the everyday investment process. “Large language models, such as OpenAI’s GPT and Anthropic’s Claude, can provide significant productivity gains because they can handle large amounts of written data, such as annual reports, debt documents, news, or marketer research, faster than people,” Vincent. Gudsdorf, head of AI analytics and digital financial research at Moody’s Ratings, wrote in a report earlier this month. “These types can automate the production of documents such as income statements or market explanations and generate investment ideas,” he added. Right now, AI is still in its infancy when it comes to architecture, said Leo Kelly, founder and CEO of private wealth advisory firm Verdence. His firm has just under $4 billion in assets under management. “There are applications but they are very rare and people don’t know how to use them,” he said. Those he calls “the naysayers,” those who don’t want to embrace AI, will be fine at first, Kelly said. But “the light at the end of the tunnel is the freight train [aiming] for them.” There are also people who are new to technology, who may jump into technology and may see challenges, and who think positively and build the technology of see, he said, which the firm is currently rebuilding its technology assets “We’re actually getting our hands around our data and organizing and organizing our data in a clean and right,” he said. “Now you can take AI and start using applications and those applications will be very effective if you take the time.” He noted that it is a big commitment. “The payoff will be big you are doing well,” he added. AI ‘wealth workers’ Finally, the authorities will get their hands around AI and understand that the data is protected, predicted proven financial planning Timothy Welsh , president of wealth management consultancy Nexus Strategy Now, the conversation among investors will go from “who is your money manager” to “which AI do you use?” he said. “If you’re thinking about creating an asset allocation and picking stocks, bonds [and] mutual funds… [financial advisors] they rely on intelligence from global asset managers,” he said. “But those searches are the primary things that AI can do better than humans.” However, AI will help financial advisers to do their jobs better – not necessarily to outsource them. Welsh advisers have a lot of time to talk to their clients, “These kinds of tools are more necessary than AI tools .” risk assessment for financial professionals, Kelly said “They can do all this work faster than they used to,” he said “They can take in more data and make better decisions at Ezra Group in a field he calls the “democratization of EQ,” or emotional intelligence, all the data now available online, such as social media posts, will help advisors learn more about their clients and thus help them connect better, he predicts The real golden ticket will be in collecting terabytes of data and intelligently filtering it and coming up with a way to compare the model,” he said. “That’s called machine learning, but doing it faster and more unstructured data…emails, notes, social media, posts, videos that AI can quickly analyze and take down and provide the right information for every customer that comes in.” AI can also help managers analyze which customers they want and how to talk to them based on their background, he said. In about two years, Iskowitz predicts that a chatbot will be able to provide complete financial plans directly to customers, interact with them and give them the option to open accounts with the click of a mouse. “[It] it will do all the work for you, put it in the right categories, set it all up and away you go. with the current capabilities of AI “Start today. This is something you can get first,” he said. “Keep it in the box now – operational success. No problem with that.” For Verdence’s Kelly, the first thing counselors need to do is ask themselves who they are — an early adopter, a denialist 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.” partner with a larger firm or, if you work at a big bank, decide if you want to leave as big banks have to manage the risk and potential of these AI tools, he said. Small mom-and-pop businesses whose portfolios should start thinking about partnering with a larger financial advisory firm or technology company, Kelly said, “AI will make you money outside of business,” Iskowitz said, suggesting advisers move in and out of other areas such as investments, tax and estate planning, advanced retirement planning, insurance and annuities. They can also use more visual tools, such as an asset map that shows a client’s financial health, he said. Consultants should have regular conversations with their technology vendors, who are already working hard to implement AI features, he advises. “Don’t go buy anything new. It’s already coming to you. Just wait,” he said. “Your financial planning software is starting the AI process. Your meeting organization’s tools are starting the process.” Also, make sure you train your internal staff and let them know that no one is being fired, he advised. Anyone whose job is being replaced can be moved anywhere in the company, he said. “It’s a learning curve. Like any software, you need to spend time training your employees and training them in ways they feel comfortable with,” he said. “AI can help you.”
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