Your Thriving Practice

Combining the human touch with AI technology

How AI may fit into financial services

As artificial intelligence (AI) continues to shake and stir the financial landscape, you can seize the opportunity to create a blend of AI and your personal touch, crafting a well-balanced cocktail of cutting-edge technology and human expertise. By garnishing your offerings with AI, your clients will get a top-shelf experience.

What AI may mean for you and your clients, now and in the future

AI uses large amounts of data and machine learning algorithms to identify patterns, gain insight, make predictions, and automate tasks — helping you manage clients’ risk and adjust your advice in real time. Incorporating AI into your toolkit can provide numerous benefits, from enhanced data analysis and client experiences to customized financial strategies and risk mitigation. As AI continues to advance, you’ll be able to leverage its capabilities to provide better services to your clients.

How you may talk to your clients about AI

AI is a technology that enables machines to learn, analyze data, and make decisions much like humans do — and has been around for years as chatbots, voice assistants, or online shopping recommendations. AI can help us improve efficiency, accuracy, and risk management, as well as create personalized financial strategies based on your unique needs and goals. By handling routine tasks and data analysis, these tools may be able to provide you with personalized guidance, empathetic support, and strategic decision-making.

Why financial professionals may want to embrace AI

The use of AI in banking and finance is becoming increasingly prevalent as the industry looks to adopt new technologies to remain competitive.

Morgan Stanley is already exploring applying Chat-GPT4 to its business by training the AI on its own documents and content to help advisors make the most of the bank’s huge library and resources. AI's multifaceted applications offer a host of benefits that can enhance various aspects of financial advisory services, providing a more efficient, cost-effective, and personalized approach to managing client portfolios. AI can provide a number of benefits for banks and financial institutions, including the ability to process large amounts of data quickly and accurately, identify trends and patterns, make predictions, and provide recommendations, which will allow you to provide more accurate investment advice to your clients.

Data analysis. As markets grow increasingly complex, financial professionals must process vast amounts of data to make well-informed decisions. With AI-driven algorithms, you can quickly analyze large datasets and identify trends.

Enhanced client experience. AI-driven chatbots and tools can facilitate real-time communication, providing your clients with instant access to information and support. Not only will this improve response times, but it will free up your time focus on the more complex tasks that require personalized experience and expertise.

two people drawn talking about money

Customized strategies. AI can help you design customized financial strategies based on your individual client needs in minutes – imagine showing your clients a model of your potential recommendations in an immediate response to a client call, rather than waiting several hours for a team of analysts. By leveraging machine learning algorithms, you can analyze each client's financial profile and risk tolerance to tailor investment recommendations.

• Predictive analysis. Through AI-powered predictive analysis, you can identify potential risks and opportunities in your clients’ portfolios, enabling them to make proactive decisions to protect and grow their assets. You could set up an AI-based system to monitor client portfolios to send you a signal when allocations fall outside of certain parameters. By incorporating real-time market data and historical trends, AI can provide insights that help you navigate market volatility and make more informed investment decisions.

Automating routine tasks. By streamlining data entry and report generation, you can focus your efforts on higher-value activities that deliver better results and save costs that can be passed on to clients, making your services more accessible to a wider range of individuals.

"If you can provide expertise and understanding with empathy, you will likely thrive in the evolving landscape".

Will AI replace financial professionals? Not yet.

While AI can process vast amounts of data and offer algorithm-driven recommendations, it lacks the vital components of emotional intelligence and empathy. Humans can develop personal connections with clients, provide guidance tailored to individual circumstances, and account for personal values, goals, and priorities. Furthermore, AI models have inherent limitations such as algorithmic biases and limitations in their knowledge base.

• Human touch and personal connections: While AI can process data and offer impartial advice through algorithms, it cannot yet comprehend or react to emotions. A bereaved family may need support and consolation more than a basic estate plan. Your clients also value the personal connections they establish with you over time. AI cannot replicate the emotional support and guidance that goes hand-in-hand throughout the planning process – nor the direct conversation they can have with you. 

Customization and distinct situations: Financial planning involves intricate decisions that demand careful contemplation and personalization. While AI can provide general recommendations based on data and past experiences, it cannot entirely grasp your client’s unique context. You know your clients best, and can account for their personal values, objectives, and priorities, when tailoring your advice.

• Algorithmic bias and knowledge boundaries: Although AI aims to be objective and data-driven, the algorithms are only as impartial as the data they are based on. If the training data contains inherent biases, such as gender or racial biases, this may result in biased advice for your clients. Most importantly, AI models currently have limitations in their knowledge base. Many AI models, at present, are language models, which can struggle with calculations.

• Posing effective inquiries: While a human advisor can skillfully ask targeted questions to select the most suitable option from various choices, artificial intelligence, at least currently, is not typically interactive. Financial planning discussions often involve a give-and-take, setting both qualitative and quantitative parameters before providing suggestions. Conversations with artificial intelligence, for the time being, tend to be a one-sided dialogue.

Financial professionals with empathy, expertise, and drive will thrive

Lagging in technology can pose a significant risk, especially if your clients are tech-savvy millennials and Generation X, on track to be the beneficiaries of the largest intergenerational transfer of wealth in history, who will expect a more streamlined and efficient experience.

This is not to say that roles will not change, and perhaps disappear, as AI continues to take hold in the financial sector. If you can provide expertise and understanding with empathy, you will likely thrive in the evolving landscape.


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