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Artificial Intelligence (AI) in Wealth Management


Artificial intelligence (AI) has significant implications for a variety of industries, including financial services. Most clients still prefer working with a human advisor, but the potential for using AI in wealth management is undeniable. Six out of 10 financial professionals are interested in trying out AI. If you’re focused on growth, it’s important to understand where artificial intelligence technology might fit into your plan.

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What Is AI in Wealth Management?

Broadly speaking, artificial intelligence (AI) refers to a body of capabilities and technologies that are designed to teach machines to think like humans. AI in wealth management describes the use of these technologies to provide financial advice, specifically with regard to forecasting the performance of investments or mapping trends in the market.

Distinct iterations of AI include predictive and generative AI. Predictive AI aims to generate predictions or projections, based on existing data sets or trends. Generative AI, meanwhile, seeks to produce new data or content based on existing data. Machine learning is another type of AI that helps computers learn by finding patterns in data. 

Advantages of Using AI in Wealth Management

Financial advisors and wealth managers can reap numerous benefits by embracing AI technology. Some of the key advantages center on AI’s ability to help advisors:

Those are all things that can prove challenging to financial advisors and wealth managers. AI has the potential to ease some of those pain points so that advisors are better equipped to save time and money while focusing on growing their businesses.

AI in Wealth Management Use Cases

SmartAsset: Artificial Intelligence (AI) in Wealth Management

How is AI used in wealth management? The short answer is that AI is primarily meant to be a problem-solver. But if you’re looking for more specific examples of how AI can potentially help financial advisors, here are some of the most common AI use cases in wealth management:  

Lead Generation

Finding new clients can be one of the most challenging aspects of working as an advisor or wealth manager and it can also be exceptionally time-consuming. AI can simplify the process by making it possible to quickly analyze large segments of historical and real-time data in order to identify likely prospects more accurately.

For instance, AI can look at social media and other publicly available information to find potential clients that align with an advisor’s target client profile. That could substantially reduce the amount of effort required to generate leads.

Client Retention

After acquiring new clients, retaining your existing client base may be a top priority. You may also be looking for ways to bridge gaps across generations within your client roster. AI can help with that by enhancing the client-advisor relationship.

What does that look like in action? Here’s one example: an advisor may use generative AI to create social media content or email marketing content that’s designed to appeal to the unique needs and interests of their client base. That could help to boost engagement rates if clients feel that the content is speaking to them personally, instead of being another generic sales pitch.

Compliance Management

Remaining compliant with financial planning regulations is important, as advisors who are found to be non-compliant may face fines or other consequences. One of the difficulties associated with compliance is meeting the existing guidelines while keeping pace with new rules as they’re made.

AI solutions can assist with that by eliminating the need for advisors to handle certain compliance tasks themselves. For instance, instead of spending time checking regulatory guidelines and updates, AI can analyze the information for you. AI can also generate reports that you can use to evaluate where any holes might exist in your compliance plan.

Investment Advice

As an advisor or wealth manager, giving advice is central to your role. AI can help to simplify that task by analyzing data sets to help you provide a greater degree of personalization in your recommendations to clients.

That’s something you can already see at work in robo-advisory platforms. There are platforms using AI algorithms to identify investment decisions that align with client needs, goals and risk tolerance. While robo advisors are no substitute for human financial advisors, they’re a good example of how AI is already being used in wealth management.

Market Trend Analysis

AI can be a useful tool for analyzing market data to identify trends, as well as tracking sentiment. Sentiment analysis looks at how opinions are formed in real time.

From an investment perspective, wealth managers and advisors might find that useful when making portfolio recommendations to clients. If an AI-based market or sentiment analysis reveals that perceptions around a particular stock are trending negatively, for instance, that could influence what type of advice they give to clients about that investment.

Increased Efficiency

AI can help to free up time in your daily schedule if you’re using it to automate routine tasks that are not central to your business’s growth. For instance, you might deploy AI technology to automate your accounting processes, including account reconciliation and invoice tracking.

Customer service is another area where AI can help to lighten advisors’ loads. Chatbots, for example, can be used to answer basic questions 24 hours a day, reducing the need for an advisor to try and respond manually to every email, phone call or text they receive.

Data Centralization

Working with a larger client base means more client data to maintain. AI can make it easier to organize, maintain and share data in accessible ways, which may be particularly helpful when you’re working for a firm that employs numerous advisors.

For instance, using AI to collect data could help with streamlining the onboarding process for new clients. You could also use AI to clean up old data records to account for clients who have left your firm.

Implementing AI in Your Advisory Business

Adopting AI requires a strategy and plan to ensure a smooth journey as you venture into new territory. If you’re interested in incorporating AI into your wealth management firm, here are three common tips to keep in mind:

  • Identify your goals: AI has lots of potential uses but it’s important to think about how it could specifically be of use to your business. In the early stages of adoption, you may want to focus on just one or two areas for implementing AI as a test to see how much value it actually adds.
  • Understand the cost: New technologies are most useful and beneficial when they can save you time and money or help to increase revenue generation. Analyzing the costs of AI adoption against the projected benefit can help you estimate your firm’s return on investment, both in the near and long term.
  • Make it a team effort: In order for AI to be used effectively, everyone in your firm must be on board. Getting feedback from your team about their concerns or expectations surrounding AI matters, as does ensuring that everyone on the team is properly trained in its use and application.

Bottom Line

SmartAsset: Artificial Intelligence (AI) in Wealth Management

The use of AI in wealth management may not be widespread yet but that’s likely to change as more advisors embrace its possibilities. Even if you’re not thinking about using AI right now, it’s wise to contemplate how it could reshape the financial services industry in years to come.

Tips for Growing Your Advisory Business

  • SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
  • Digital marketing can be an effective way to increase your brand’s visibility and potentially connect with new leads. If you’re not investing much time or energy into social media marketing or email marketing yet, you might consider how you can use AI to simplify some of those tasks. For example, you could use a tool like ChatGPT to create social media content that you can then schedule to post to your account profiles automatically.

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