July 14, 2024
Advancing the Advisor—How AI Fits into the Future of Wealth Management


AI is finding its place in private wealth management but won’t replace the human connection.

The era of generative AI is just beginning, with palpable excitement and promising early pilots—but challenges as well. As AI evolves, rapid developments in natural language processing, data analytics, and machine learning pose likely disruptions for financial services but also great opportunities for firms and advisors able to adjust to radical change. Likely winners will be firms with strategic foresight, modern technology stacks, and strong execution capabilities.  

According to Norton Rose Fulbright, 76% of leading financial services firms are already using AI or planning to do so within the next few years. They recognize it as a powerful new ingredient in success. But like any ingredient, AI must be used responsibly, as an additive rather than a substitute. 

Among potential benefits are improved productivity, super-personalized client experiences, rapid identification of patterns and trends, enhanced decision-making, reduced variability in service levels, and improved risk management. Another will be time savings; an Accenture study estimated that AI could automate 30% of advisor tasks, which can give them more time to focus on client service and satisfaction, as well as practice development. 

Some predict clients will increasingly opt to self-serve, relying solely on automated messages spit out by faceless AI chatbots. Questions arise: Will machines replace humans? Will it be considered “old-fashioned” to have a real person offering guidance? How will the client experience change? 

In my view as head of technology & operations at Rockefeller Capital Management, AI will augment, not replace, the advisor-client relationship, and human touch will continue to play a central role in serving wealthier clients. They will be best served by a private advisor as the hub in a larger wheel of expertise, planning resources, and technological support. Built on algorithms, AI can never fully represent the human emotions—empathy, instinct, and creativity—that are part of making decisions. 

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One consequence of technological advancement is that clients are already “drinking from a firehose,” with massive amounts of information at their fingertips. In today’s fast-moving world, a combination of AI-generated insights and guidance from a professional financial advisor will help those with complex lives and investment portfolios to narrow the stream. 

There are abundant opportunities to equip all advisors, regardless of their individual areas of expertise, with access to a broad range of consistent, high-quality insights. Private advisors will be able to leverage AI and deliver customized financial solutions, white-glove service, and uncompromising objectivity and integrity.

Where AI Is Most Helpful

Certain AI use cases like portfolio optimization and risk management are nothing new for advisors. The technology already exists in some form, but deep learning and generative AI models will catalyze analytics and reporting. AI algorithms and large language models can analyze huge sets of historical market data, risk factors, and economic indicators to optimize investment portfolios far more efficiently and accurately than classical machine learning and more traditional models—making a new level of hyper-personalization possible. 

Advisors can use AI models to analyze each client’s financial goals, risk tolerance, and investment preferences combined with market data and the available suite of advisor and firm services to provide tailored financial plans, recommendations, and actionable insights. 

AI can assist in managing investment risks and ensuring supervisory and regulatory compliance by automating portfolio risk assessments, supervision routines, and compliance monitoring. This enables advisors to make more informed decisions in implementing risk-mitigation strategies. AI-powered systems can also help financial institutions stay up to date with evolving regulatory requirements and streamline manual oversight tasks. 

Where Humans Are Most Helpful

While there is much AI can accomplish, the human element is the bedrock of successful relationships with high-net-worth and ultra-high-net-worth clients. Private advisors play an invaluable role in helping clients comprehend what they are seeing, consider alternatives, and make rational decisions. No “robo advisor” can truly know a client’s unique wants, needs, and circumstances. No robo advisor can “read” the excitement and optimism or fear and anxiety in a client’s face, voice, or body language. It’s hard to imagine what the response would be to, “Hey Siri, make me feel better about this investment.”

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Relationships matter. Consider the birth of a new child into a client’s family. An algorithm can calculate how a portfolio should be altered to prepare for college and estate planning, but can it send a handwritten note that will resonate with the client? It’s difficult, in our view, to “replicate” sincerity. 
The emotional elements of trust, openness, and the human touch will remain essential to the forming and building of long-term client relationships. What we can expect is the exciting opportunity to augment those elements with AI technology, with the promise of an even brighter future in wealth management. We will be able to serve our clients more effectively and holistically than ever. The key will be to hold firmly to our place in the client equation.  



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