Generative Artificial Intelligence (AI) has created a “wow” factor that might have surprised wealth management figures. There are several use cases for AI – the task now is to refine how the industry puts them into practice, a webinar hosted by WealthBriefing in conjunction with EPAM has heard. 

AI will move from general adoption to more specialist uses and may take several years to do so in wealth management, Glenn Murphy, who advises C-suite executives in wealth management, said. 

Murphy said AI could move from widespread use to being more sector-specific, all the way down to the individual level. He said there is a raft of use cases, such as helping clients and advisors make decisions, driving personalisation of services, helping with KYC and compliance functions and regular client reviews. 

EPAM, a leading digital transformation services and product engineering company, has already explored such ideas in a white paper white paper, How Financial Services Organizations Can Automate Processes to Optimize for Growth. 

Murphy spoke alongside Panos Archondakis, VP and global head of banking and wealth management at EPAM; Debbie Wills, head of wealth management for Europe at Standard Chartered Private Banking; and Stephen Harris, chief executive, ClearView Financial Media, WealthBriefing. (To download the webinar, click here.)

Momentum is building
The ways in which AI can affect wealth management is a hot topic in the sector. The rise of ChatGPT and other platforms has seized the public’s imagination, creating optimism about how it can lift productivity and boost the bottom line, while in the public sphere, it has led to concerns that AI could take on a life of its own. Tech giants such as Microsoft, Google and Meta are fighting to dominate the GAI landscape. In late July, Swiss firm Vontobel, to give one example, said it was strengthening its cooperation with Microsoft to deploy Azure Open AI Service at the enterprise level, supporting its employees in their daily work using artificial intelligence. The CFA Institute, a global organisation accrediting financial professionals in the sector, has introduced AI into its curriculum. 

Morgan Stanley is one of the most prominent wealth management houses using AI today. One of its best-known developments is Next Best Action, an AI engine for messaging clients and prospects. In May, Morgan Stanley Wealth Management said it would build a “bespoke solution” with OpenAI, the artificial intelligence research and deployment lab.

Use cases
In the webinar, Murphy said value creation, personalisation, and helping decision-making show that AI has much to offer. 

He said that relationship managers would have “more power to call on more sources of information.”

EPAM’s Archondakis said that he and his colleagues are seeing a lot of hybrid advisory systems being developed in the wealth space.  

“A real focus on trying to tie together all of those individual use cases to try to provide a general improvement to the day-to-day business of wealth management,” he continued, giving examples such as improving the quality of material presented to clients. 

It is important to distinguish between generative AI and machine learning. Archondakis pointed out that generative AI can create new content, and in wealth management, this is showing itself in particular in text form. Machine learning does not generate new content; it is more about matching up patterns.

Compliance
Standard Chartered’s Wills said that AI-driven analysis would be useful as managers seek to keep up with regulations, such as the UK’s new Consumer Duty regime. (The Duty is designed to ensure that firms achieve “best outcomes” for clients, a process understood to require a great deal of data.)

AI-driven deeper analysis can be used to model products that suit clients, which will be important, Wills said. 

“People are still going to want personal recommendations from time to time…. they want the personal touch,” she said, arguing that the hybrid model of wealth management is where the sector is likely to head. 

“Most clients will say as long as I have got someone to shout at, occasionally, you know I am quite happy about what you are using in the background,” she said. 

AI could create more differentiation and personalization, which “has to be a benefit for clients,” she said. 

Pondering on whether AI adds to costs or helps manage them, Wills said that “where clients with less money to invest have been left out of the equation in the past few years, this will give them more entry into the market. You should be able to use the data for clients with less investable products to source better products for them.”

Archondakis noted that Consumer Duty is coming regardless, so the question is whether AI can help firms handle it more efficiently than if AI did not exist at all.

Pivot
Asked if AI is a threat to wealth advisors, Murphy responded: “There are many opportunities for those who want to pivot into AI” and develop skills. He said that firms will adapt and adjust as they have done with other technologies. 

“People have adapted, and wealth managers certainly have adapted,” Murphy said. 

He added that everyone “needs some kind of relationship management” and wants a personal touch. He drew a parallel with a patient’s relationship with a doctor, where tech enhanced the resources of a doctor but did not replace them.

Wills said wealth managers’ jobs may have to be adjusted, but there will always be a need for a face-to-face relationship, and AI frees up RMs from certain work that isn’t necessarily focused on clients. 

Murphy said data “leakage” is a risk that needs to be monitored and AI needs a firm data framework around it – drawing a parallel with how ESG investing has evolved over the past 10 years. 

Archondakis agreed with his fellow panellists, adding that the quality of tech which a wealth manager provides advisors is an important “pull factor” for attracting advisors to an organisation. 

Wills added that it is important for firms to “take your clients with you,” helping them to understand the role that AI plays in the relationship. “See it as a friend rather than an enemy.”