Is it possible to benefit from AI in wealth management industry?
AI is a hot topic now. It is becoming particularly intriguing in the context of wealth management. After all, wealth management is powered by data and its sore point is… the human traits resulting from emotions or classical cognitive errors in Kahnemann's understanding. Will AI assist wealth managers in risk management or investment decision-making?
As we can read on Fintech.global, according to Graeme Condie, head of strategy and operations at Velexa, a platform that offers investing as a service, AI could transform the way traders and investors handle news, organise unstructured data and streamline information flows. This could lead to better risk management, insight generation and decision-making.
Although AI is subject to the risk of error or bias, according to Condie, quoted by the portal, it offers the opportunity to deal with these issues in a way that is not possible with humans - the technology can give rise to unbiased traders or advisors not subject to emotion.
Furthermore, Condie believes that AI could help democratise wealth management. This would mean that investing would no longer be restricted to those with a higher level of education or financial knowledge, as automated advisers and recommendation algorithms could help guide decision-making, making investing accessible to a wider audience.
Who will lose their jobs?
The use of generative AI in wealth management has raised concerns about job losses. While some believe that the technology has the potential to create new roles, others argue that the specialist expertise of experienced - human - advisers will remain irreplaceable.
Rhys Jenkins, senior sales development representative, believes that AI has the potential to displace jobs, but at the same time generate new roles, such as developing and managing AI within organisations. However, he also warns of the risks associated with incorrect AI assumptions that can lead to poor investment decisions. As a result, human oversight remains paramount in ensuring the accuracy and reliability of AI systems.
>>> See how WealthArc helps EAMs in everyday work by enhancing their performance with digitalisation
Time is money. Especially in Wealth Management
Time is of the essence when it comes to taking advantage of new trends such as AI. Even if there are some unknowns, firms that start using this technology now can gain a competitive advantage. However, the current use cases of Chat GPT for wealth managers are limited to text generation, and there is still a need for human fact-checking.
Generative AI has the potential to transform wealth management (and more!), particularly in areas such as risk management, insight generation and decision-making. However, there are still risks and uncertainties associated with the technology, and the full extent of its impact on the industry remains to be seen. While some experts believe it is still too early to determine its true value, others are convinced that firms that fail to use Artificial Intelligence will be at a disadvantage to those who have bet on this technological innovation.
Ultimately, the future of technology in wealth management will depend on how well it is able to deal with uncertainty and deliver on its promises of increased efficiency, accuracy and democratisation of the industry.
More on AI in wealth management can be found here