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The existential crisis facing wealth managers

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The existential crisis facing wealth managers

A new study has underlined the dramatic impact artificial intelligence is having on wealth management. 

The report, produced by Forbes Insights and software provider Temenos, surveyed 310 wealth managers and high-net worth individuals across the globe about their use of AI.

One of the key findings was the emergence of a new kind of wealth manager. 

In 2016 the survey identified inertia among wealth managers when it came to digitisation, with only 25% describing it as essential.

The figure jumped to 52% in this year's report. 'Executives now resolutely see digital technologies as essential to success in delivering enhanced client experiences,' the study said. 

Within this, AI is becoming a central part of managers' approach to technology, with around 84% seeing it as having 'strong' potential to enhance client experiences. Almost a third see it as a game changer. 

AI game plans 

Morgan Stanley and Wells Fargo are widely seen as bellwethers of emerging wealth managment, according to the study. Both focus on AI-driven solutions across the broad spectrum of operations. 

Chuck Munroe, head of AI Enterprise Solutions at Wells Fargo, said: 'We are leveraging artificial intelligence across the organization to make our data smarter, and to create new customer experiences along the way. 

'We wanted to do it in a way that made sense from an organizational perspective, from a customer perspective, and ultimately positioned
us to deliver in an efficient way that enabled lines of businesses across the company.' 

A significant portion of wealth managers think AI will have a positive impact across their organisations. This includes cybersecurity, costs. portfolio returns and client communication, where over 70% saw technology as an important driver of results. 

'Machine learning is a powerful approach to identifying fraud and identifying both opportunities and anomalies,' said Morgan Stanley’s Jeff McMillan.

'The machine can look at billions and even trillions of historical activities and make informed correlations. It sees what’s working for you and what’s not, and then it gives you more of what works and less of what doesn’t.' 


Chatbots are another technology permeating the wealth industry, according to the study. 

'Driven by natural language processing, these platforms also respond to aspects of an individual client’s situation and even predict certain issues that might arise,' the report said. 

Chatbots were not a factor in 2016. However, 70% of wealth managers now see them as beneficial, alongside 57% of high-net-worth clients. 

Scott Welz, managing director of innovation at Wells Fargo Advisors, underlined the power of this technology.

'Chatbots can offer correct answers or correct information to address a client’s concern or need,' he says.   

'They can also predict other areas related to the issue. We want to be able to create an experience where there’s a complete answer to every question in the first interaction.' 

Wealthy clients have also become more sophisticated in their use of technology. The study describes this as secular trend that will 'only
gather steam as millennials and younger generations age into the bedrock segment of the business.' 

A total of 82% of investors surveyed are interested in the use of AI to manage their wealth. More than two thirds (67%) want their wealth manager to adopt some form of AI immediately. 

Of more concern to wealth managers will be that more than half of investors (59%) warn that firms who do not embrace these technologies will not survive. 

Ed Gogel, a high-net-worth investor who spent his career working with computers and AI technologies and went on to set up his own investment firm, said: 'The AI-enabled environment really provides a lot more transparency for investors. It removes emotion. AI technologies are agnostic, which is really what you want in an investor.' 

The future   

Wealth firms  see AI becoming more of a reality as plans and strategies to integrate AI into products and services are launched.

'The predictive aspect of AI will be a driver of transformative personalisation in wealth management,' the report said. 

'Both the executives and the clients surveyed believe the biggest impact will be on risk management, with better analysis and forecasting—the same elements that will deliver true predictive investment guidance. Each client then gets a whole new level of attention.' 

Forbes and Temenos conclude that wealth managers are acutely aware of the importance of leveraging AI across their organisations to make data smarter and deepen relationships with clients. 

'The winners are going to be the ones with intellectual capital
combined with accurate and consistent data that is predictive of the future,' McMillan said. 



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