4 ways AI will impact wealth management - and RIA's losing their jobs is not one of them.
Traditional human based wealth management is known for its high cost base requiring costly slow manual processes and being very much a relationship based business.
With its ability to process vast amounts of data rapidly, AI enhances decision-making, risk assessment, and portfolio management. Wealth managers and the platforms they use can leverage AI algorithms to analyze market trends, automate the tracking and synthesis of client information, identify investment opportunities, and optimize asset allocation.
This is a potentially transformative moment for the wealth management industry it means:
1. The cost base (time and resources) to serve clients will dramatically reduce - advisors can work with more clients and clients with lower AUM than historically they have needed to increasing the size of the applicable market significantly
2. Advisors will have more and better data, tools and automation to help them - increasing the service levels that they can offer without using up more time and resources
3. AI mitigates human biases and errors, leading to more objective and data-driven investment strategies. By continuously learning from data patterns and market dynamics, AI algorithms adapt to changing conditions, improving performance and minimizing risks.
4. AI will be naturally be amenable to more technical led solutions - the old divide between a human advisor and a Robo Advisor will blur - new models of support which augment the personal human experience will emerge.
Technological change comes with challenges. The wealth industry has been historically reluctant to champion new technologies fearing it will erode the value of the individual advisor. We don't believe that will be the case, customers who value the personal relationship will still want that and pay for it, technology can enhance but not replace this.
The second big challenge is regulation and compliance - how will this need to change to enable technology whilst protecting clients interests. We are optomistic about this, its being solved for self driving cars it should be relatively easy to solve it for wealth management and the benefits of expanding access to advice in any form for more people is surely a good thing.
The advisors who can pivot to embrace technology are going to be the ones who win the most during this process of digitalization.
Unifimoney is a turnkey digital wealth management platform enabling Community Financial Institutions to compete with Fintechs and Big Brand Banks at high speed, low cost and without the need for technical integration. If you would like to speak to us please reach out or visit the website.
