(AssetMark) Artificial intelligence (AI) is changing the way many professionals operate—including those in the financial services industry. Embracing the game-changing power of AI for financial advisors is not just a strategic move; it can be a transformative leap. Sure, it’s important to use caution when integrating new technology, but top advisors stay on the cutting edge when it comes to advancements that help drive the industry forward.
As a financial advisor, unlocking the full potential of AI in your practice empowers you to do more, serve your clients better, and stay ahead of the curve. The right tools help your days become more productive, your insights more profound, and your client interactions more personalized.
And it's not just about adopting the newest technology; it's about completely revolutionizing your approach—because in this fast-paced world, staying ahead means embracing the future with vigor and confidence.
Let’s dive in and consider how financial advisors can use AI to unlock their growth potential.
How Is AI Being Used in Financial Services?
AI enables the personalization of financial services and products, allowing advisors to tailor recommendations to the unique goals and preferences of each client. Additionally, AI-driven tools empower advisors to identify new opportunities by leveraging data analytics to uncover investment prospects and market trends that may have otherwise gone unnoticed. Many companies use AI to improve risk management and fraud detection. Powerful fintech tools help advisors increase transparency and compliance by making it easier to navigate complex market scenarios.
While it’s currently getting a lot of attention, AI isn’t a new tool in the financial services industry.
In 2016, Bank of America created a chatbot to help customers with banking tasks and transactions. And in 2017, JP Morgan Chase & Co launched the Contract Intelligence (COIN) platform to analyze legal documents and extract key data points and clauses—a tool able to process over 360,000 hours of mundane tasks in mere seconds.
How Can AI Help Financial Advisors?
Research says nine out of 10 financial advisors believe AI can help grow their book of business. Additionally, 83% believe AI will have a direct, measurable, and consistent impact on the client-advisor relationship in the next 18 months.
Benefits of AI for Financial Advisors
In the dynamic world of finance, AI is like a reliable sidekick for advisors. It’s there to support you, helping you accomplish more in less time. From automating routine tasks to providing insightful analytics, the right tools allow you to focus on what matters most—nurturing client relationships and making strategic decisions for your business.
- AI can streamline mundane tasks.
- AI can provide data-backed insights.
- AI supports proactive client communication.
- AI can give you back time in your day.
- AI can help you nimbly scale your business.
- AI can help you lower operational costs and increase revenue.
Benefits of AI for Your Investors
AI isn't just a tool; it's the ally investors need for a smart and seamless experience. You can deliver this experience by providing your clients with a journey that's not just about numbers but a path tailored to their needs.
AI steps in to understand investor preferences, analyze market trends, and provide real-time insights without increasing demand on you or your team. This helps you create a personalized and enriched investment adventure for your clients, solidifying their trust in you as their guide through the financial landscape.
- AI can facilitate a smoother experience.
- AI is available to answer questions 24/7.
- AI can continually watch for opportunities.
- AI can improve trust and confidence.
How Are Advisors Using AI?
Many advisors are already using various forms of AI. These new tools powered by artificial intelligence revolutionize how financial advice is created, delivered, and consumed. Most advisors (87%) are interested in using AI tools for daily use when they provide a clear benefit.
Here are some of the ways advisors are using artificial intelligence within their practices.
Research & Insights
- Portfolio Management: AI aids in dynamic portfolio management and rebalancing, optimizing asset allocation based on real-time market conditions and client goals.
- Predictive Analytics: AI uses historical data and predictive analytics to forecast market trends and guide advisors in making proactive decisions.
- Risk Management: AI assesses and manages risks by continuously monitoring market conditions and identifying potential threats and fluctuations.
- Opportunity Identification: AI identifies investment opportunities by analyzing vast amounts of data and market trends, helping advisors make informed decisions.
Customer Support
- Personalized Services: AI tools can analyze client data to tailor financial advice and marketing strategies according to individual needs and preferences.
- Segmentation: AI can help you understand how clients are divided and where similarities exist for actionable insights.
- Fast Engagement: AI-powered chatbots and virtual assistants enhance client communication, providing quick responses and improving overall engagement.
- Gathering Feedback: AI can help you collect client responses for crucial data that helps you analyze behavior and craft a client-centric experience.
Business Support
- Operations: AI automates routine tasks in your daily workflow, streamlining operations, reducing manual efforts, and improving overall efficiency.
- Cost Reduction: By automating processes, AI helps financial advisors cut costs and allocate resources more effectively.
- Business Planning: Advisors can use AI to spot patterns in client behavior so they can target and scale with greater precision.
- Data Management: AI can help advisors store and access their information efficiently so they spend less time organizing, filing, and researching.
- Staffing: Firms can enhance onboarding and training by providing personalized learning experiences, automating training modules, and facilitating continuous skill development with AI.
- Marketing: AI can help you write and create campaigns for general engagement—and actively respond to your audience for a more personalized experience.
Security
- Fraud Detection: AI algorithms detect unusual patterns or behaviors in financial transactions, enhancing security and minimizing the risk of fraud.
- Compliance: You can help increase transparency and maintain compliance with ever-changing regulatory demands by automating monitoring, reporting, and training processes with AI.
4 Challenges of AI for Financial Advisors
AI might be your secret weapon, but it’s not necessarily a silver bullet. It’s important to know where AI can fall short. Here are some of the challenges you’ll want to beware of as you employ AI to scale your marketing and reporting.
Cybersecurity Attacks
Scammers are using AI, too. Increased hacking risks mean you need to stay on top of trends and best practices for cybersecurity. It’s critical to know where your weaknesses lie—AI-based security systems can certainly help, but they can also generate false responses to threats.
Faulty Data
AI only knows what it’s trained on. That means if your system is fed incomplete or incorrect data, you’ll get faulty results. Not only is it important to make sure your data is clean, it’s also important to fact-check the output of your AI systems instead of just assuming accuracy.
Lack of Real-Life Experience
AI is still just a tool—it hasn’t experienced the market or industry shifts the way a seasoned advisor has. At the end of the day, AI can spot patterns and predict trends, but it lacks real-world awareness and intuition. Make sure you balance the information it gives you with what you know as a professional—and don’t let it override your vision, policies, or best practices without good reason.
Lack of Personal Touch
Your customers trust you for a reason. While AI can make it easier to keep them informed, it can also make interactions feel less personal and meaningful. The solution? Make sure you don’t rely on AI to form crucial relationships or take the place of meaningful touchpoints.
AI Best Practices To Scale Marketing and Reporting
Are you ready to make big moves with new tech? Here are some best practices to keep in mind as you leverage various AI-powered tools.
Protect Confidential Data
Don’t share confidential data with AI tools that aren’t built to keep your information siloed from other users. You need to protect your clients' sensitive information as well as your strategies and other things that are unique to your firm. Ensure that any AI systems you use comply with robust security protocols.
Fact-Check Outputs
Let AI do the heavy lifting, but don’t take everything at its word. Take an active role in verifying AI-generated insights to maintain the highest standards of accuracy and reliability in your advisory services.
Understand AI Weaknesses
Familiarize yourself with the limitations of AI tools. There are plenty of areas where human judgment and expertise are irreplaceable. Find those areas and lean in so you can benefit from the best of both worlds.
Don’t Put All Your Eggs in One Basket
Diversify your resources and tools to mitigate the risk of relying too heavily on one source of truth. Using a variety of platforms, points of reference, and authorities helps you build a more robust picture.
Assess Your Processes Regularly
This isn’t a set-it-and-forget-it solution. The game is changing at a rapid pace, and you’ll need to continually adjust your approach towards tools, tactics, and best practices. Set up regular checkpoints to evaluate how AI integrates into your practice and ensure that it aligns with your evolving needs and goals.
Protect Your Tone and Values
AI should complement, not replace, the unique values and tone you bring to client interactions. If you rely too heavily on AI, you may get redundant content or language that doesn’t fit your brand voice. Maintain the human touch in your communications by using AI for brainstorming rather than for creating an unaltered end product.
Drive Efficiency and Scale Your Practice With AssetMark
AssetMark has spent the last 25 years helping advisors like you navigate the ever-changing financial landscape. Our mission is to empower you with the tools you need to stay ahead of industry trends and scale your practice effectively.
Our turnkey solutions extend from asset management to client engagement and beyond.
Working with AssetMark gives you access to cutting-edge technology, experienced consultants, and a wealth of resources to help scale your business efficiently, meet the dynamic needs of your clients, and navigate the shifting currents of the financial advisory world. We’re here to help you thrive in an increasingly competitive market.
Ready to get started? Talk to our team.
