(UX Wealth) The financial advisory landscape is evolving rapidly, driven by advances in artificial intelligence (AI), machine learning (ML), and new technology. According to recent studies, their clients are increasingly seeking access to investment strategies that leverage these technologies for better risk management and more personalized service. However, many advisors are unsure how to begin incorporating AI-driven models into their practices. This article aims to serve as a guide for advisors looking to integrate AI and ML into their investment strategies, while recognizing the importance of partnering with a tech-savvy platform capable of handling these investments.
The Growing Demand for AI-Driven Investment Strategies
Recent statistics highlight the growing demand for AI-driven investment strategies and advisors who are able to offer them are seeing an increase in assets and client satisfaction:
- Client Demand: According to several recent study by eToro, about 40% of retail investors are now open to using or are already using AI tools to guide their investments.
- Advisor Interest: Despite the demand, only 20% of advisors currently offer AI-driven models. However, 70% of those not currently offering these models express a strong interest in incorporating them into their practices.
Why Advisors Need a Platform Partner
To successfully integrate AI-driven models, advisors need to make sure they perform due-diligence and identify a robust platform partner who has the technology to even support the strategies. Here’s why:
- Industry-Best Trading: State-of-the-art, tech-driven trading capabilities that operate in real-time, ensuring optimal execution and efficiency is crucial to ensure that the portfolios are followed accurately.
- Sleeve-Level Functionality: Many of the advisors surveyed expressed a desire to blend AI-driven models with their existing strategies or third-party models at any desired percentage, providing unparalleled flexibility and customization. The idea is to introduce these concepts to their clients gradually rather than being forced into an all or none decision. To accomplish this, your platform must have the latest in sleeve-level functionality that can separate strategies out in order to trade, bill, and report on them individually in a single account.
The Playbook: How UX Wealth Can Help You Integrate AI-Driven Models Now
Step 1: Provide Historical Allocation Files
The first step is for advisors to provide UX Wealth with the historical allocation files for their existing models. This data is crucial for analyzing and integrating AI-driven strategies.
Step 2: Input History into AI Engine
UX Wealth will input the historical data into their advanced AI engine. This engine will plot all strategies along the efficient frontier, allowing for a clear visualization of potential performance improvements to ensure a diversified lineup of complimentary strategies.
Step 3: Create Target Risk Allocations
In collaboration with the advisor, UX Wealth will develop target risk allocations for conservative, moderate, growth, and aggressive strategies. This ensures that the AI-driven models align with the advisor’s overall investment philosophy and client needs.
Step 4: Develop a Model Allocation Pitch Book
UX Wealth will then create a comprehensive model allocation pitch book. This includes detailed fact sheets and risk/return statistics, providing advisors with the necessary tools to communicate the benefits of AI-driven models to their clients.
Step 5: Implement Automatic Rebalancing
Finally, the models will be set to automatically rebalance every month, aligning with current market conditions. This automation ensures that the investment strategies remain optimal and responsive to market changes.
Incorporating AI and machine learning into investment strategies is no longer a futuristic concept—it’s a present-day necessity. By partnering with a platform like UX Wealth, financial advisors can seamlessly integrate these advanced technologies into their practices, meeting client demands and staying ahead of the curve. Follow the playbook outlined above to embark on this transformative journey and unlock the full potential of AI-driven investment strategies.
