How AI is Disrupting Wealth and Asset Management

AI for wealth management is becoming more popular with wealth managers every day. According to Accenture’s recent survey, it is stated that most wealth managers are seeking AI assistance in wealth management today. In the next two-three years, they anticipate that AI will play an even more important role in their work. The reason for this is that AI can help them make more informed decisions and manage their portfolios more effectively. 

How is AI Used in Wealth Management?

Financial advisor fraud is not a new phenomenon. If a financial advisor is managing your money, you’re ultimately responsible for what happens to it. This means that you need to stay on top of your finances, and not just hand everything over to your advisor and hope for the best. It’s in your best interest to know what your advisor is doing with your money, and why they’re making the decisions they are. You should also regularly review your portfolio to make sure it’s on track to meet your financial goals.

AI has a long history in the financial sector- dating back to the early days of computer programming. AI has been used in a variety of applications, including fraud detection and auditing. AI-based applications can either augment human expertise by handling low-value tasks or proactively take on more strategic roles for businesses. Either way, AI for asset management guarantees a significant level of accuracy in forecasts by analyzing billions of different scenarios and data points. This accuracy can be a boon for businesses, as it can help them make more informed decisions and avoid costly mistakes.

How is AI Adding Value to Wealth and Asset Management?

The financial services industry has seen a growing interest in artificial intelligence (AI) and machine learning (ML) technologies in the past decade. The wealth and asset management industry has been a significant adopter of AI, with several firms using AI to drive value across the various stages of the investment process, from data gathering and pre-trade analysis to post-trade reporting and client engagement. Here are some examples of how AI already adds value to wealth and asset management.

1. Portfolio Management

AI algorithms are being employed to study individual clients’ portfolios for better management and assistance. For example, AI can be leveraged to make decisions related to stocks. Where machine learning can be used to determine the relationship between risks and returns associated with a company’s stock after assessing thousands of factors. Including quantitative trends and qualitative data such as financial forecasts, news reports, and social media posts. Analyzing the risk variables such as losing mortgaged property, bankruptcy,  and the qualitative aspects into consideration, AI in asset management evaluates the kinds of stocks that can fall drastically without any likeliness of rising again. These suggestions keep improving in effectiveness through continuous learning and evaluation of stock market trends. 

2. Compliance Management

AI algorithms are trained to identify regulatory information from public notices and detect changes suggested in recent investment policy statements to study investment guidelines to minimize risks and costly expenses. With AI, businesses can potentially clean and read multiple data elements to streamline day-to-day operations related to governance and compliance.

3. Risk Management

AI in wealth and asset management typically enables organizations and independent asset managers to navigate through various data inputs seamlessly to avoid human errors and make the best investment decisions. Applied AI forecasting and fraud detection techniques help overall financiers to make data-driven decisions that can maximize their wealth at any given time.

4. Tax Planning

AI-based tax planner compares tax assumptions, projections, and configurations. Additionally, it analyzes data from records and other financial sources to calculate amounts such as lost income due to tax and other similar figures. Based on the analysis of previous years, the tool recommends optimal tax planning and configuration for clients. 

5. Estate Planning

With the help of AI and machine learning, it is now possible to automate many of the decisions that need to be made when it comes to estate planning. From analyzing a person’s complex situation to providing an optimal outcome regarding their estate, AI can offer various benefits. AI can even create legal documents for such persons to make the process much easier for the person making the decisions and those who will be affected by them.

6. Robo-advisors

Robo-advisors are becoming a huge part of financial advisors’ day-to-day operations. The benefits of having a Robo-advisor include generating single-product proposals for potential client investors, API solutions to monitor risk-based portfolio allocations and managing concept funds, and finally adopting AI to make investment decisions automatically.

AI and the future of Wealth Management

According to Gartner, by the end of 2024, one-third of enterprises are will shift from the pilot stage to operationalizing AI in wealth management. Till now, early adopters of AI are focused on challenges associated with risk and compliance. But recently, organizations started to experience the growth of AI in making better market predictions and services. AI-driven analytics employed at the core can help organizations and client-focused individuals to deliver personalized advice by understanding and anticipating clients’ needs.

The vast majority of financial service firms have mentioned that AI strategies have been integrated into various target business units, including the development of proof of concepts. The adoption of AI is expected to grow at a potential rate in upcoming years. The various examples of this technology can be deployed and leveraged to make organizations more time efficient.

Today the availability of a large number of different pilots for different use cases makes it harder for financial advisors to choose the right tools that work for them and helps them get a higher value. As the awareness of AI in wealth management continues to grow, we can see more opportunities waiting to be discovered for better integration of AI into existing wealth management systems and improve the perception of their clients. 

SoulPage AI-driven data insight and service companies offer various solutions across wealth management. Our services help you access and evaluate the AI needs for your organization in better wealth and asset management. We offer end-to-end AI assistance in portfolio management, compliance and risk management, and client management. To know more about our services, or for free AI consultation, contact us.