The Future of Wealth Management – the Role of AI in Providing Control and Direction for the Clients to Choose and Handle Their Portfolios

By Mihir Kapadia, Founder and CEO of Sun Global Investments

The wealth management industry is currently going through a period of transition in which it has seen several key changes since the turn of the millennium. Technology, in particularly artificial intelligence (AI), has been implemented into many different sectors to great success and wealth management has been no exception to the digital revolution. Through improving business operations and strategy such as allocating and managing portfolios to enhancing client control and visual interface, AI has already begun to change the landscape of the sector.

Mihir Kapadia

However, it is important to understand, that with changing priorities now something many firms must deal with on an almost constant basis, they also need to now be in a position to utilise the resources in place to cater for a new client-base which has grown up with technology and will thus have different expectations and experiences when it comes to it.

Therefore, wealth managers should be aware in what ways technology can be used positively and if done correctly, the opportunities it will provide in this ever-competitive industry. 

Improved Operations

One of the main benefits of incorporating AI into any business is that it can cut down on more laborious and repetitive tasks. This can include paper work and monitoring various investment tools which enables a more effective allocation of workers and allows for a more innovative environment and increased profits.Studies have also indicated AI can help achieve savings of around 30 – 40%.

In addition, AI has now provided a platform for managers to outperform their competitors. This is particularly evident through its ability to gain vast quantities of information to support ideas and develop understandings of the client, and run multiple test scenarios before taking a decision, which would be too time consuming and virtually impossible for a human to compete. Through this,when computers identify and pass this information in a digestible format to us as wealth managers, the decision quality can improve.

Enhanced Customer Experience

With many companies struggling to maintain their high standards of service due to regulations and tighter margins, technology has not only allowed for a better portfolio management, but it has paved the way for firms to deliver a superior brand experience. With the ability to offer personalised relationships, firms are in a position to use the data to better understand their client in an efficient manner without having to stifle through mountains of paper work. Managers can also ensure better and simplified client communications, without overbearing them.

Wealth Managers have already started to deploy AI to refine the portfolio of their clients, by predictively managing their preferences though a scientific approach. The analytics which technology can provide means that time can be spent more effectively to identify opportunities and also be used to build automated engagement systems that can monitor progress, undertake decisions or notify risk in real time.

Enhancing the client experience is pivotal to a firm’s success and AI is now the driving force for this due to it providing a connection that was previously untapped by the industry. This now provides a much easier edge for firms to get ahead of the competition and deliver an improved service and reach a much deeper, psychological level of customer relations.

 Managing Risk

With AI-enabled risk management, companies are in a better position to identify and manage both known and unknown risks in the vast pools of data available to them, which conventional methods can no longer undertake. In terms of practical examples, AI can help with effective risk practices which will be imperative to the success of the firm as AI can help identify, assess, control and monitor much quicker and more accurately.In turn, AI can also be used to detect, monitor and repel cyber attacks whilst also integrating information about suppliers, including their financial risk, sustainability and social responsibility scores.

 Final Thoughts

As demonstrated, the benefits of technology are vast as it enables rapid business transformation, the driving of innovation and value creation and most importantly, allowed firms to enhance customer experience which maximises profit potential for both parties. AI has meant that the industry has now gone beyond the extend of cost reduction and efficient operations to now experimenting and identifying new ways of improving the sector.

However, companies should not put all their eggs in one basket as it is still not completely perfect. Although it is improving and changing out lives, it still does not offer what humans can – building relationships and providing experiences. Human intervention cannot be excluded for all practical purposes & an ideal situation would be a tech driven human based approach.

We at Sun Global have started trailing AI in Wealth Management and is still at a very nascent stage. We imagine it to handle about 10% of or total portfolio by the end of 2020.***