The rapid development of artificial intelligence (AI) over the past few years has already had a profound impact on FinTech in more ways than one. Wealth management, one of the biggest sectors of finance, is currently in the midst of an AI-fueled disruption.
To survive this change, wealth managers must realize that this technological shift in the status quo doesn’t have to eliminate them from the equation entirely; it can augment their abilities.
Obsolescence or Advantage?
Players in the wealth management industry are trapped between a rock and a hard place. Traditionally, a personal relationship with an experienced, insightful, human advisor was the ideal setup for clients. But with recent technological advancements came personalized sophistication. Just as AI tailors your shopping choices on Amazon or your watching options on Netflix, clients have come to expect this customized, precise experience when managing their finances as well.
A great number of wealth management services are not embracing this change in perspective. They’re still holding on to the traditional line of thought, which isn’t completely bad; clients still do like a human touch in their experience instead of feeling like a robot is dictating their financial future. But by refusing to adapt, wealth managers are not only refusing revenue growth, they’re also refusing to solidify a place in the future for their firm.
AI is a tool like any other technology. And while many people fear it could make jobs obsolete, it also has the potential to give adaptable wealth managers an unparalleled advantage. AI can analyze investment moves, market trends, and a whole plethora of other variables to “connect the dots” in ways that humans can’t see. Using this to enhance decision-making is the key to keeping wealth managers in business.
Have Your Cake and Eat It Too
It’s easy to see why many wealth managers are afraid of AI. Robo-investors and advisors seemingly remove humans from the frontlines and optimize financial decision-making for clients. In turn, this not only makes it more difficult for human managers to participate in the process but also to justify their service fees.
Fortunately for them, most people, millennials included, actually desire a hybrid approach to investing. As mentioned before, nobody wants their financial future to be decided by a robot, something that has never had to handle money for itself. And while AI may be fine for day-to-day and even moderately complicated situations, clients still prefer humans when it comes to getting an explanation of higher-tier concepts of complexity, like how the market is evolving and why it’s trending the way it is.
The big financial firms are already aware of this. All of them, from London to NYC, are developing offerings to adapt accordingly. Like self-driving cars, AI can handle the majority of the basic services, but they still falter in dynamic scenarios where advanced insight beyond numbers is needed. This is where human wealth managers will continue to exist, and even thrive, in the future.
Survive, Adapt, Augment
To ensure their future, there are a number of other tactics that investment advisors can employ besides sitting and waiting for more complex problems to arise in their clients’ finances. Ironically, technology plays an integral role in making these strategies viable.
Just as it’s wise to learn from others’ mistakes, those in the financial industry should look to other sectors to understand how they are dealing with technological disruption. Examining these value chains will give advisors insight into what roles humans play in these industries, which could help them extrapolate unfulfilled needs in their own. Of course, AI can accelerate this process exponentially.
Gaining a deep understanding of a client’s financial habits, specifically, their spending outside of investments, allows a wealth manager to have a comprehensive overview of what’s important to them. In turn, this would allow an advisor to tailor that client’s financial plan and investments more to what they find relevant.
Lastly, and perhaps most importantly, advisors must refine their communication. With social media and other avenues, client engagement has completely changed from just a few years ago. Financial advisors that refuse to adapt to these times will exclude themselves from numerous valuable opportunities. Of course, it’s a little more nuanced than coming up with witty Twitter taglines. Investment managers should strive to distill value in their engagement. Applying this insightful advice demonstrates that they’re not only up-to-date with modern times, but also earnestly willing to help anyone that will listen. While technology is changing many aspects of business, sincerity will always remain a defining factor of success.
Vigilance Is Key to a Future in Finance
FinTech development is undoubtedly improving many aspects of the finance industry, but it also brings quite a few challenges. As with many other new tech paradigms, chief among these challenges is the concern of data privacy. Modern consumers only have peace of mind when they know how their data is being utilized outside of their view, so it’s prudent for financial advisors to be able to have these conversations. If you can’t hold your client’s trust in this matter, they probably won’t trust you with decisions involving their money.
Another aspect largely uninvestigated is the looming inevitability of a major market correction. For the most part, the advent of AI has only coincided with relatively favorable markets. But for an economic crisis that’s more than a little bearish, clients will definitely turn to human advisors with experience in this situation rather than untested AI trying to deduce uncertainties that it’s unfamiliar with.
Staying adaptable is key to survival. By turning weaknesses exposed by tech into strengths and capitalizing on areas where they’re still sorely needed, wealth managers can boost their chances of sticking around for the future.Tags: AI, AI App Developer, AI App Development, AI applications, AI services, app development NYC, artificial intelligence, artificial intelligence app developer, artificial intelligence app development, fintech, fintech app, FinTech app developer, fintech app developers, FinTech app development NYC, NYC app developer, NYC app developers