FinTech Conversations: Generative AI in wealth management

In this installation of FinTech Conversations, I interviewed Claude Denton, Advisor360°’s Vice President of Enterprise Data Platform, about generative AI in wealth management and how it can be used as an end-to-end accelerator and competitive differentiator.

How can AI be used by enterprise-class software companies as an end-to-end accelerator?

There are two types of AI to consider here.

First, are the large language models (LLM) or “foundation models” that give computers language, vision, and reasoning capabilities as powerful as the algorithmic and mathematical capabilities that have supported the software revolution to date. This class of generative AI will make enterprise software much simpler, more efficient, and easier to use. Foundation models transform the experience of using software by automating routine tasks, streamlining the user experience and workflows, and assisting wherever text or images need to be generated, cataloged, or summarized.

Second, is specialized AI. The same trends driving rapid progress in generative AI are also enabling highly specialized AI that can develop insights into other complex systems, such as economies, markets, biology, and weather. These AI models are trained on industry- and company-specific data to make enterprise-class software more powerful and capable in specialized areas such as modeling, planning, and simulation.

These two types of AI will combine into an end-to-end accelerator for enterprise-class software users, reducing their administrative burden and enhancing their productivity.

How can AI be leveraged by enterprise-class software companies as a competitive differentiator?

Enterprise-class software companies that invest in understanding, integrating, and extending generative AI technology and are creative in its application will outpace those that do not, and the distinction will only accelerate as AI continues to improve. The differentiation will appear first in ease of use and time on task, due to enhancements in user interface and automation. Then it will expand to quality of results as AI co-pilots and assistants proliferate throughout workflows, working alongside the user to catch errors and recommend courses of action.

What is the impact of data quality on the ability to deliver industry-leading AI?

The acronym GIGO refers to “Garbage in, garbage out”—a common characteristic of most information processing and decision-making processes. The application of AI is no different. Carefully constructed prompts and high-quality examples are key to getting good results from generative AI, although the huge amount of learned training material allows AI to “think” its way around some input problems. In the training of more specialized AI, self-consistent and correct data is even more critical. The goal specialized AI is to recognize the connections among a variety of business data and outcomes from a relatively small number of examples; the impact of incorrect data on either side can be extreme.

How will advisors (and their clients) benefit from AI?

I mentioned that AI will lighten the administrative and workflow management burden on advisors, allowing them to devote more time to understanding and serving the lifestyle needs of their clients. AI is also very likely to provide business and relationship insights to help optimize prospecting and retention efforts, leading to business growth for advisors and higher satisfaction for clients. AI has the additional potential to uncover insights around portfolio construction and financial performance that lead directly to portfolio growth.

What will AI-enabled wealth management look like in the next 12 months? In the next five years?

In the next 12 months we will see broad adoption of AI by leading software vendors for enhanced user experience, simplified workflows, better communications, and the generation of business insights. The rapid pace of development in AI makes it hard to provide a vision with a five-year horizon. There could be an ongoing and accelerating set of AI breakthroughs that fundamentally transform our economy and how we think about work and wealth, let alone wealth management. Or progress might plateau. Regardless, the foreseeable future will see deep integration of AI technologies into Advisor360°s platform solutions, such that having a suite of virtual digital assistants managing communications, schedules, and workflows, improving workflows almost exponentially for our current and future customers.

Ronnie Campbell is a Senior Content Marketing Associate at Advisor360°, responsible for generating insightful and engaging content that develops the company’s social media presence and story.