Could AI become the manager?

By Janet Brice
How AI will shape the future of wealth management with a report from Womble Bond Dickinson...

Artificial Intelligence (AI) looks set to reshape the future of wealth management and may even become the manager, claims a report by the Womble Bond Dickinson.

As AI continues to be adopted and innovated at a rapid pace, the technology stands to provide the wealth management industry with increasingly better decision-making capabilities, more customer centric services and a much broader customer base.

AI technology looks set to improve performance for a company by offering computer programs that follow a human-driven algorithm which can learn from past mistakes.

The report reveals that AI exists to perform all the asset management tasks and can become quantitative analysis firms which assist their clients understand market trends. 

In the future the adoption of AI technology will allow all wealth managers to have access to effective tools that have previously only been available to blue chip companies. 

“AI can be programmed to make lightning-fast trades as the market changes. It may catch market shifts earlier and identify turning points faster than your current analysts,” commented Womble Bond Dickinson.

“At worst, this technology provides inexpensive and trustworthy predictions and advice that a wealth manager can consider as part of her many relevant inputs when advising clients. At most, the AI becomes the manager.”

According to the report asset managers are already implementing AI into their businesses but the report identifies other ways it can be used:

AI can assist in wealth management through data analytics, processing information and automatically interpreting trends used past performance as a guide to predict the future.

“The technology is fast, analysing books in seconds. AI never sleeps. AI makes no emotional decisions. AI plays no favourites. Wealth managers can naturally save time and money by implementing this technology into their practices,” says Womble Bond Dickinson.

AI can be easily customised. “You can program it to reflect a client’s level of risk aversion or risk tolerance and create a portfolio that matches,” states the report.

AI looks set to democratise the asset management business. By using AI smaller investment portfolios will be able to invest in sophisticated analysis customised to their own requirements.

“Millennial investors tend to seek out lower fees, regular portfolio rebalancing capabilities and transparency in reasoning. So effective use of AI can encourage wealth managers to reach further into the population of investors and build for the future,” says Womble Bond Dickinson.

“Some of these applications are already being used in the industry, while others are on the way. AI’s impact on every aspect of your practice is closer than you think. And if you do not capture its advantages, your competitors will,” concludes the report.

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