In early May 2024, one of the premier events for the wealth management sector, the Wealth Management EDGE conference, kicks off in Florida. As usual, the organizers are pulling out all the stops, announcing sponsors, lecturers, and an agenda packed for over 2,000 participants. I’d like to take a closer look at that agenda.
Along with the traditional wealthtech, growth, investment strategies, advising, and networking panels, a session titled “The AI Assembly” stands out. This is no surprise. The potential of artificial intelligence and its impact on business are hot topics, with a healthy dose of hype persisting for over two years now. But there’s also a crucial truth: AI is here to stay, and smart businesses need to be proactive in exploring ways to leverage it.
Numbers back this up. A recent Gartner report projects the global AI in wealth management market to grow at a CAGR of 23.8% from 2022 to 2027, highlighting the significant rise of these technologies.
This is where Sphere comes in. A core mission of ours is to empower clients to harness the transformative power of automation, data, and artificial intelligence. Why? To elevate their offerings and ultimately improve people’s lives.
In simpler terms, we develop AI solutions tailored for businesses, specializing in translating technological trends into practical and commercially viable applications. Our expertise spans large language models, intelligent automation, time-series forecasting, predictive analytics, search technology, and sophisticated data strategy, architecture, and management.
By following this approach and implementing AI for our clients, we’re constantly uncovering new possibilities for its application in real-world businesses. The Wealth Management sector is no exception!
Empowering Financial Advisors Through Next Best Action
The first noteworthy application of artificial intelligence within wealth management is the utilization of “next best action” recommendations. As noted in a Harvard Business Review article, by analyzing transaction data, spending patterns, and risk profiles, financial advisors can use GenAI to offer highly personalized recommendations for financial products and services at scale. Unlike traditional approaches that rely on broad demographic information or static investment preferences, the next best action uses real-time data analysis to provide timely and relevant advice.
During my last call with Nauman Gondal, the CEO of Apollo Private Wealth , Nauman shared his insights on the future of the industry:
“Generative AI and augmented intelligence are poised to revolutionize the wealth management landscape. By leveraging these powerful technologies, we can provide our clients with a level of personalized, data-driven advice that was previously unimaginable. This will not only enhance the efficiency of our operations but also deepen the trust and engagement we have with our clients.”
Nauman Gondal, the CEO of Apollo Private Wealth
Additionally, a McKinsey study highlighted that the use of AI-powered tools can significantly enhance the efficiency and effectiveness of financial advisors in several ways. Building on this foundational knowledge, I would like to add my own observations. Thus, the future AI-powered landscape for wealth management companies could shape up as follows:
Personalized Financial Planning: By analyzing a client’s financial history, spending habits, and investment preferences, genAI can help advisors create highly personalized financial plans that evolve as the AI continues to learn from the client’s financial behavior and changing market conditions.
Risk Assessment and Management: Financial advisors can recommend tailored strategies for risk management based on the client’s specific situation, helping to safeguard their investments and financial health.
Real-time Market Insights: GenAI can process market data in real-time, providing financial advisors with up-to-the-minute insights to advise clients on immediate actions, such as buying, selling, or holding assets based on current market conditions.
Predictive Analytics for Financial Products: GenAI can predict which financial products or services a client might need in the future, based on a comprehensive understanding of the client’s financial journey and goals, as well as their past interactions with financial products.
Automated Portfolio Management: Machine learning models can build and manage investment portfolios using predefined rules and objectives, automatically rebalancing portfolios to optimize performance and manage risk based on real-time market conditions.
AI-powered Customer Interactions: AI-powered chatbots can handle routine customer inquiries and assist with account management, allowing financial advisors to focus on more complex or strategic tasks and improving overall customer experience.
Regulatory Compliance: AI systems can monitor real-time data and communications, flagging potential compliance issues and alerting financial advisors to investigate or take action, helping to mitigate risks and ensure regulatory compliance.
Reducing Back-Office Tasks: AI can significantly reduce the workload of back-office tasks such as data processing, document management, and administrative support, thereby increasing operational efficiencies and allowing staff to focus on higher-value activities.
Share and Maintain Corporate Knowledge: Corporate knowledge agents use AI to manage and optimize the flow of information within the company, ensuring that decision-makers have quick and easy access to accurate and relevant data. This enables more informed decision-making and improves overall corporate governance.
As you can see, even though the technology is novel, the list of its applications is quite impressive. Alex Umansky, Wealth Manager at Ameriprise Financial Services, with whom we recently discussed the impact of AI on the industry, also emphasizes its importance and the opportunities it creates for wealth management companies.
“The reduction in operational costs and increased scalability, which are some of the most significant benefits of the AI era, open new doors for us. Simply put, AI and automation will democratize wealth management, making our services accessible to a broader range of clients. This allows us to cater to different wealth segments more easily than through traditional methods.”
Alex Umansky, Wealth Manager at Ameriprise Financial Services
Preparing for Generative AI Implementation
There are a lot of common use cases for generative AI, but the implementation path is unique for each company. Our client discussions reveal a critical truth: success with GenAI hinges not just on technological readiness, but also on strategic vision and operational adaptability, especially for those embarking on their AI journey.
Sphere offers a structured approach to navigate this challenge: the GenAI Readiness Program. This program equips your team with the knowledge and skills to leverage GenAI effectively, delivered through four key steps:
- Educational Workshops and Training Sessions: We provide comprehensive training covering GenAI fundamentals, wealth management applications, and ethical considerations surrounding AI technologies. These sessions cater to all technical proficiency levels within your organization.
- Technology Assessment and Infrastructure Evaluation: Our experts conduct a thorough evaluation of your current technology infrastructure to identify any necessary upgrades or modifications for GenAI support. Additionally, we assess your data management practices to ensure they are robust enough for AI integration.
- Strategy Development for GenAI Adoption: In close collaboration with your leadership and operational teams, we formulate a strategic plan for GenAI adoption that aligns with your business goals and market dynamics. This includes pinpointing potential use cases, establishing realistic objectives, and defining clear success metrics.
- Pilot Projects and Prototyping: To mitigate risk and enhance understanding, we initiate pilot projects that leverage GenAI in specific business areas. These projects provide a practical, hands-on experience to witness the benefits of GenAI in action and refine your approach before full-scale deployment.
Participating in such programs (let’s be honest, we’re not the only player in the market) positions your firm not only for successful implementation of these advanced technologies but also for leadership in the wealth management industry’s transformation. This proactive approach ensures you can harness the full potential of GenAI to optimize operational efficiency, elevate client services, and propel business growth.
Evolve or… Just Ask How to Do It
According to a recent BCG report, firms that invest in AI and digital capabilities are poised to gain a significant competitive advantage in the wealth management market. So, the question isn’t if, but when. Why not get a head start and start building your foundation now?
Once again, I would like to emphasize the variety of services available to today’s businesses. If you look at our portfolio, a few main requests from clients stand out, and we excel in addressing these needs. Our top offerings today include:
Data Lake Implementation Services: Implementing or upgrading an enterprise data warehouse is one of the most important projects your business will undertake. Leverage our data lake architecture blueprints to ensure your data infrastructure is robust, scalable, and optimized for advanced analytics.
Advanced Analytics and Machine Learning: Becoming a data-driven organization with the meaningful insights required to make immediate business decisions. Our advanced analytics and machine learning solutions empower you with the tools to harness your data effectively.
Implementation of AI POCs: We assist in the development and implementation of AI proof-of-concepts (POCs) to validate the feasibility and benefits of AI applications in your business context. This step is crucial for minimizing risks and ensuring successful AI integration.
Automation and Systems Integration: Finally, we help organizations to streamline operations with automation solutions and seamless systems integration. By automating repetitive tasks and ensuring your systems work harmoniously, we help you improve efficiency and reduce operational costs.
I would like to end this article by mentioning the Wealth Management EDGE conference once more. If you are reading this article before the event, I will be happy to discuss with you any questions that may have arisen from reading this material right at the event. If you are reading this after May 2024, our team at Sphere will be pleased to guide you through GenAI and all the benefits it can bring to your business. Feel free to contact us. Just click here.
