Our US correspondent talks to senior wealth management industry figures about what they think are the likely important themes for the sector in 2024, touching on subjects such as the role of private equity in consolidation, and artificial intelligence.
1) Client-facing AI
Tech types trying to illustrate the futility of making predictions about how technology will evolve love to tell the story (perhaps apocryphal) about the introduction of the telephone in the 1870s.
There was a demonstration of the amazing new invention before a stunned audience who couldn’t believe that people could now speak to speak to each other for the first time in human history without being physically together. “And one day,” the presenter (perhaps Professor Bell himself) confidently told the audience, “there will be a telephone in every city.”
Artificial intelligence surely was one of the big stories of 2023. Predictions ranged from AI enabling a utopian future to a dystopian vision of malevolent machines destroying humanity as we know it. Just as no one 20 years ago envisioned that most people in the world would routinely carry around a small device that’s a combination telephone, television and super computer, the evolution of artificial intelligence will no doubt be just as surprising.
Practical AI applications for the workplace began to hit the market last year. Expect developments to accelerate in 2024 as tools to assist advisors automate and improve interactions with clients proliferate, generating content and facilitating data crunching.
“More client-facing generative AI assistants will go live in 2024, marking the real start of AI’s impact on the industry,” said fintech consultant Grant Easterbrook.
Personalizing client communications
Prospecting and client management will be top priorities for AI developers, according to Siddartha Oza, co-CEO at Sora Finance.
“AI can greatly facilitate lead generation and nurturing,” said Oza. “If done right, AI can step in with effective and automated smart follow-up communications that build trust and establish expertise.”
For client management, AI can craft personalized client communications at scale, Oza said, deepening the relationships with client households. New applications “will also help identify high value and timely calls an advisor can make to build trust and establish expertise,” he added. “Predictive AI can potentially spot when a client could benefit from refinancing a mortgage or when a client might be thinking about moving their account.”
Generative AI apps next year will be able to create “meaningful recommendations and content” advisors can use to grow their business, boost sales and expand relationships, according to Softlab 360 CEO Henry Zelikovsky.
AI apps will help advisors communicate more effectively with current clients and create new proposals for prospective clients, Zelikovsky said. By generating content as if it came entirely from the advisor and continually adding and augmenting content, the AI apps will create “a cycle of customized enhancements,” Zelikovsky predicted.
Data cleansing and enrichment will be the biggest AI breakthrough in the near future, said Kendrick Wakeman, co-founder and CEO of WealthTech Strategy Partners.
“Contrary to popular belief, AI is not as much of a computational exercise as a data exercise,” Wakeman asserted. “This is doubly so in finance, where the data sets are large, not normalized, incredibly messy, and near impossible to clean by hand.”
Financial transactions in New York and London are supported by “a
mountain of drudgery in Jersey City and Birmingham,” Wakeman
said. “That is a blocking factor and, oddly enough, the only cure
is AI, which can help gather, normalize, and enrich data into the
sorts of data sets where it can then provide real insights far
beyond what we can do now. Once that is solved, all sorts of
exciting things can happen.”