(AssetMark) Innovative changes impacting today's industries are things sci-fi writers used to only dream of. From science fiction to real-world uses in our daily and professional lives, the possibilities made available to us through AI seem nearly limitless. What is the benefit of AI for financial advisors, and how can you make sure you are utilizing cutting-edge tools to benefit your clients?
As a financial advisor, AI-powered tools can provide an especially lucrative opportunity—an estimated $2.6 trillion to $4.4 trillion globally—to streamline and uplevel your practice through automation. But what exactly is artificial intelligence, and how can you use it to optimize your business and client relationships? Keep reading to learn more about how you can use AI to help scale your practice and increase your productivity.
What Is AI?
When you envision artificial intelligence, what–or who–do you picture? While you may know of the uptick in the business adoption of AI across industries, you may still wonder how this evolving technology works.
Artificial intelligence is the simulation of human intelligence by a system or a machine, with the goal of thinking like humans and mimicking human behaviors. This includes reasoning, learning, planning, and more. AI models are built on algorithms that pick up on patterns and structure in data, then apply those learnings to predict human behavior.
AI can also be trained to understand portfolio structures and client risk tolerance. Financial advisors can leverage AI-powered tools to predict market trends, support marketing creation, and even predict market trends. This level of automation frees up valuable time for advisors to invest in client relationships and help scale their business.
A Brief History of AI Innovation
In 1950, mathematician and computer scientist Alan Turing introduced the Turing Test as a tool to determine intelligence in computers and whether machines can truly think. That same year, Isaac Asimov published I, Robot, a pivotal portrayal of artificial intelligence that has helped shape our current pop cultural imagination around cybernetics.
By 1956, computer scientist John McCarthy would expand on these early concepts at the Dartmouth Summer Research Project on Artificial Intelligence, where he officially coined the term “artificial intelligence.” This conference helped launch AI research in the decades that followed.
The 1980s would see a boost in AI research funding, allowing for the expansion of “deep learning” techniques, which enabled computers to learn using experience. Expert systems–which mimicked the decision-making process of a human expert–were also introduced in this period. Anyoha notes that:
“The program would ask an expert in a field how to respond in a given situation, and once this was learned for virtually every situation, non-experts could receive advice from that program.”
Today, as the capacity for artificial intelligence to quickly process massive amounts of data continues to grow, so does its application across industries. The advent of publicly available generative AI platforms like ChatGPT is also largely responsible for the recent surge in interest and use cases. The introduction of the ChatGPT chatbot has shown that AI can, in fact, “learn” human language, which has helped users quickly automate and tailor communication according to their business needs.
How AI is Impacting the Financial Services Industry
As technology continues to evolve, financial institutions are now leveraging AI tools for things like:
- Portfolio building
- Market forecasting
- Debt management
- Stock price predictions
- Algorithmic trading
...and more.
Banks also use AI to analyze customer behavior to improve customer segmentation and targeted marketing. Additionally, automated AI-driven data collection helps improve and enhance decision-making for organizations needing to meet regulatory compliance obligations.
AI can support three important business needs: automating business processes (typically back-office administrative and financial activities), gaining insight through data analysis, and engaging with customers and employees. To get the most out of AI, firms must understand which technologies perform what types of tasks, create a priority list of projects based on business needs, and develop plans to scale across their business.
What AI Means for Financial Advisors
AI tools grant financial advisors the opportunity to outsource a widening variety of marketing tasks, giving them time back to deepen client relationships and scale their businesses. It is also becoming increasingly affordable and more accessible to implement AI tools, which will be imperative for firms to stay ahead of the curve.
While AI's potential in business is limitless, its success relies on an understanding of its capabilities and how to leverage them.
“Every executive, every worker needs to have a digital mindset, which means understanding how these technologies work, but also understanding the deployment of them and then the change processes you need to do in terms of your organization to make use of them.”
In a nutshell, AI finance tools can significantly streamline your internal workflows and marketing processes, while also making it customizable to the unique needs of your business.
The Value of AI for Financial Advisors
Artificial intelligence is becoming a lucrative option for advisors interested in automating their business processes. In fact, 97% of advisors believe that AI can help them grow their book of business by more than 20%.
These platforms offer powerful ways to automate business operations, leaving you with more time to scale and build impactful client relationships. With the right tools and strategy, you can transform your practice by:
- Building out profiles based on names, public data, and data from third-party vendors.
- Using tools like Compliance.ai to help stay compliant, consistently monitor transactions and communication, and flag potential problem areas.
- Automating lead segmentation and leveraging client data to develop personalized messaging with tools like HubSpot AI and Marketo.
AI for Lead Generation
In the guide Unleashing AI Powered Growth, it’s noted that AI tools can help analyze lead information gathered from multiple platforms and client outreach activities. Artificial intelligence has also been proven to help increase lead generation by as much as 50% and reducing costs by as much as 60%. You can leverage tools like Heyreach.io to help scale your prospect outreach by up to 10x, while Wifimoneytools.io offers additional AI-powered resources to help optimize lead generation.
AI-Driven Audience Targeting and Segmentation
Did you know that you can leverage predictive AI to quickly analyze and segment audience groups? More specifically, predictive AI can analyze a variety of client attributes across demographics, making it easier for advisors to identify patterns and better understand their clients’ unique needs. This feature helps tremendously with predicting client behavior and determining which clients may drive the most growth.
Additionally, you can optimize your audience targeting with generative AI tools like User Persona. After entering a short description of your services, User Persona generates data-backed customer profiles that include demographic details which can be leveraged to design marketing and communication decisions around. This allows you to segment and tailor your services to the unique needs of your target clients.
Market Forecasting and Predictive Analytics With AI
Market forecasting is another powerful use case of AI for advisors. With the help of machine learning algorithms, AI can forecast market trends and predict audience behavior.
“Financial institutions and investors don’t need to spend hours conducting analysis or make investment decisions on gut instincts; instead, they can use AI-powered tools to navigate the complex landscape of the stock market and improve prediction accuracy.”
AI-Written Client Communication
Tailoring your communication efforts is key to ensuring that you’re sharing relevant information with each client segment. When you know your audience, you can tailor your marketing communications accordingly. With AI models that tell you what investors are looking for, the guesswork is taken out of connecting with your clients.
Once you’ve identified your correct target audience, generative AI tools like ChatGPT can produce custom messaging for emails, social media, web content, and more. Predictive AI tools can also help analyze client profiles to determine the best time to communicate, helping advisors communicate the right information to their clients at the right time.
How To Get Started with AI for Your Practice
As we’ve seen, AI use cases are becoming increasingly diverse within and outside of the financial services industry. If you’re ready to dive deeper into the game-changing potential of using AI in your practice, head over to our blog, AI for Advisors: How to Scale Marketing and Reporting to Unlock Growth.
For even more insight on integrating AI into your workflow, download our latest guide, Unleashing AI Powered Growth, for an in-depth breakdown of:
- The top AI tools for financial advisors in 2024
- Choosing the right AI tool for your firm’s unique needs
- How advisors are successfully utilizing AI to help scale their businesses and deepen client connections
- How to help get more leads than your competitors with AI
- Improving client communication with AI-powered segmentation
- Leveraging AI to help increase AUM through better client relationships
AssetMark Is Here for You
The team at AssetMark is here to help support you with any area of your business. We have worked directly with many financial advisors to help them find the tools to optimize their wealth management services.
We’d love to chat. Contact our team to schedule a brief consultation and learn more about what we can do for you.
