Wealth Management Firms Begin to Implement AI with an Eye on Security and Regulation

These days, when it comes to artificial intelligence (AI), our minds go right to ChatGPT and generative AI. With all the attention it has received in the general population, ChatGPT has yet to fully take over the wealth management landscape. The industry is still waiting for that one game-changing solution. Meanwhile, firms across the country are exploring various forms of AI for a range of use cases that generate greater back-office and middle-office efficiency and secure better experiences and outcomes for clients.

In an effort to benchmark the current state of AI in wealth management, F2 Strategy recently conducted a survey of mid-sized wealth management firms to understand how they are currently using AI tools, what they wish they had the ability to do with AI and concerns and challenges they are encountering. The results show that wealth management firms are highly interested in using AI to improve their businesses, and so far, more than half of the firms we spoke with have AI projects in the works. Many have found ways that AI can help them save time and reduce or eliminate NIGOs and duplicate data entry.

Here are four big trends that came out of F2 Strategy’s AI survey:

Trend 1

Majority of Wealth Management Firms have an AI Project in the Works Today

Insights and Actionable Intel

  • Wealth management firms are working on AI projects that impact many facets of their business. Forms of AI range from straightforward to sophisticated.  
  • A full quarter of survey respondents are using Optical Character Recognition (OCR) or predictive analytics or both.
  • Firms are keen to explore how AI can be applied to enhance various aspects of their business, including client experience, efficiency and growth. 
  • Some firms report they have found significant time savings with AI tools. For example, spending 90% less time on transcription.
  • Take Action: AI effectiveness hinges on data quality. While AI tools mature, look for gaps to fill around your data processes and management so that you're ready when it comes time to implement.

Trend 2

Difference Between What Wealth Management Firms are Working on Now and What They Want to Do in the Future

Insights and Actionable Intel

  • Wealth management firms recognize opportunity with AI, particularly generative AI, believing they can achieve additional benefits as AI functionality matures and becomes available.
  • While excited about AI’s potential, firms indicate they are proceeding with caution citing big concerns with maintaining high levels of data security and complying with looming regulatory requirements.
  • Budget constraints, issues with data quality and competing priorities also factor into their decisions to invest in AI technology.
  • Take Action: Start small. Understand your potential use cases and assess where AI can help your firm streamline functions to realize cost or time-saving efficiencies. A small scale POC with a defined goal will help narrow the scope and data required, allowing you to show the potential AI can deliver.

Trend 3

Firms Hunger for More Education on AI’s Capabilities, Value and Real-World Applications

Insights and Actionable Intel

  • Many respondents recognized there is much to learn about AI, as well as many unknowns in this rapidly developing field and expressed a strong desire to learn more about AI’s real-world applications. 
  • Specifically, wealth management firms want to see case studies showcasing successful AI implementations and want to understand the possibilities and risks of AI technology.
  • Many also want to understand the role regulatory agencies will play in its use.
  • Take Action: Appoint an internal team member to be an AI champion. This person would be responsible for understanding what AI capabilities and regulations exist and advocating for the AI solutions that address your business requirements.

Trend 4

74% of Wealth Management Firms Expect to Move Forward by Collaborating with Vendors

Insights and Actionable Intel

  • This statistic is in line with what we see from wealth management firms about technology generally.
  • Many respondents report participating in current BETA test groups with vendors.
  • Take Action: Show vendors the problem areas that you think AI could address and challenge them to collaborate with you on state-of-the-art solutions.
Survey Information: The data in this report is pulled from a survey conducted by F2 Strategy in August and September 2023. The survey includes responses from 39 leading RIA, Wealth Management and Asset Management firms representing $6 trillion in assets.

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