As innovations enabled by artificial intelligence flood the financial services industry, advisors may feel overwhelmed by the need to implement the technology and unsure of where to start.
Concerns about costs, client data privacy and the bandwidth needed to learn new technologies are common among retirement plan advisors, according to industry professionals. The risk of being left behind increases as AI continues to evolve and competitors increasingly use these tools.
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But in addition to considering the high stakes of ignoring AI, advisors can also consider what they stand to gain. Alexander Kearns, CEO of DataDasher Inc., says financial advisors can save up to 10 to 15 hours per week when AI is implemented into daily workflows with responsibilities such as pre-meeting briefings, follow-up communication and on-demand portfolio context.
Identify the needs of the firm
Whether advisors are in a firm of two or 2,000 professionals, individuals can control how their firm implements the use of AI.
A good first step for advisors is to “identify areas where they need help,” according to Mark Gilbert, co-founder and CEO of Zocks Communications Inc., an AI platform for financial services.
Another recommended first step is to learn what AI is, how it works, and what the technology can do. Lenox Advisors Inc. President Greg Large says parent company NFP Corp. and partner company MassMutual provide introductory and in-depth AI courses and training for its team.
“Fear of the unknown is the biggest barrier to change,” Large says.
Gilbert says public domain chatbots like ChatGPT are a free and convenient way to start using AI and understand how it can help in general administration. But if advisors want help with industry-specific tasks, they should look to AI tools “specifically designed for regulated financial workflows,” according to Kearns. Speaking Nov. 17 at the Investments and Wealth Institute Strategy Forum in New York, Kearns told a room full of wealth management professionals that there is a tool for almost every advisor task. They include personal assistance tools like Google Gemini or Microsoft’s Copilot, workflow automation tools like DataDasher and Zapier, marketing and customer communications tools like Bento Engine or FMG Suite, and portfolio risk and reporting tools like FactSet and Nitrogen.
Zocks’ latest product, Document Intelligence, launched in collaboration with eMoney on December 2, automatically extracts customer data from financial documents and syncs it directly into eMoney, a wealth management and financial planning software. The product was developed to facilitate the customer onboarding process, which typically involves extensive documentation.
“[Before] AI, someone would fill 200-300 data points into eMoney by reading these documents and typing them directly. As you can imagine, it takes hours, and it’s probably not the most fun thing,” Gilbert says. “Now we can just take the documents, click the button and go. [get] plans… feedback to customers or prospects.
Dangerous areas
In addition to learning the AI’s capabilities, advisors also need to know its danger zones. Public chatbots like ChatGPT can see and store user data, so advisors should not provide confidential data to chatbots, Gilbert says.
Critical compliance topics recommended by Kearns include learning where the data is located: Advisors should know whether the AI tool’s server is based in the United States, who has access to the stored data, and whether data facilities are shared with other companies. According to Gilbert, knowing where digital data is located is critical because every business uses software and cloud storage of that data software is at risk of a security breach.
Kearns says companies also need to know if their AI data is being used to train AI models that other companies can access, emphasizing the importance of data isolation.
In every use case, humans must verify the outputs of all AI models. Kearns says the research cited by AI needs to be verified, the analysis needs to be reviewed, communications need to be changed, and assigned tasks need to be tracked and monitored. AI models must also document every step of their processes for the benefit of human reviewers and in anticipation of future audits.
Train the next generation
Ricky Illigasch, eMoney’s vice president of product management, wrote in an email that his company learned last year that 70% of advisors surveyed viewed AI as a tool to help them make decisions, and 72% valued AI’s ability to analyze large amounts of financial data.
“Ultimately, this technology will help advisors provide more valuable and insightful advice,” he writes.
Large says Lenox Advisors provides an AI-powered succession planning tool for its own older advisors, designed to help coordinate succession plans, facilitate acquisitions and help the next generation move into leadership positions. The firm is currently working on an internal bot that would be part of the succession planning tool and would, according to Large, allow new advisors to ask questions about practices based on internal information.
Likewise, as advisors from older generations retire and transition clients, the AI tool will help younger advisors learn more about those clients and provide insights to help those advisors grow and grow their own practices, according to Large. In this way, knowledge of past and present practices can help shape the future of the business and also be useful to future advisors.
