Generative AI’s acceptance into the world of wealth management is continuing at a rapid pace. Both WealthTechs and wealth/asset management firms are starting to embrace the technology with new solutions. One such solution is the generative AI assistant, with a number having launched over the past year.
Morgan Stanley is the latest firm to dip its toes into the world of generative AI assistants. Earlier this month, the investment giant revealed a suite of generative AI tools for financial advisors. The OpenAI-powered tool will generate notes during client meetings and highlight actionable items. Advisors using this tool are singing its praises, noting how it can save time and focus on more important tasks.
In a similar move, BlackRock recently implemented its own generative AI tools for its staff and clients. The tool is designed as a co-pilot for BlackRock’s Aladdin platform, a portfolio management software that lets investment professionals view and manage daily investments. The LLM tool allows clients to extract data from Aladdin, offering unprecedented insights and efficiencies.
More wealth managers are set to release their own generative AI-powered tools in the coming years. For instance, Goldman Sachs recently announced it is experimenting with the technology stack and JP Morgan is building its IndexGPT, which will build thematic indexes by scanning news articles for keywords.
With the launch of all these services, Alex Skolar, CPO at investing-as-a-service provider Velexa, believes this is just the start. “The launch of several Gen AI assistants this year marks the beginning of a significant trend rather than a fleeting fad.
“Long-term, these technologies will transform the financial advisory landscape by automating processes and filtering the noise from the ever-expanding data signal. This will enable users and financial advisors to focus more on value-added activities, enhancing their ability to provide tailored advice and support to investors. As AI continues to evolve, its role in wealth management will expand, driving efficiency, personalization, and improved client outcomes.”
Aside from streamlining manual workloads and improving customer interactions, generative AI-powered assistants can also attract younger investors. The digital-savvy generations prefer the convenience of loading an app and handling their finances without needing to speak to an advisor. Through generative AI-powered assistants, a firm could provide these self-service capabilities without needing to hire more advisors to meet the increased customer base. Ultimately, this could help them scale without needing extensive resources. Over time these AI tools could provide investors with personalised, scalable advice and educational resources, but the human will still need some level of interaction.
“Human oversight will remain essential due to the importance and sensitivity of financial data. The industry must implement stringent guardrails to avoid AI hallucinations and ensure models are thoroughly tested, maintaining higher standards than in most other sectors to protect client interests and maintain trust.
While the market is seeing more generative AI-powered assistant tools entering the market, there are some risks to their use. Skolar noted several potential issues that can arise from these tools, including potential biases in algorithmic decision-making, data privacy breaches, regulatory compliance issues, and overreliance leading to diminished human oversight. However, this shouldn’t discourage firms from exploring the tools.
Skolar added, “However, many of the same issues could arise with human advisors. Furthermore, technological failures or misinterpretation of complex market dynamics could result in significant financial losses for investors.”
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