How artificial intelligence became financial advisors' favorite new tool

Advisors are using artificial intelligence to expand access to wealth management insights.

Traditional financial plans often required multiple meetings between advisors and clients with frameworks left to stagnate outside the meetings, but the inclusion of AI has allowed that conversation to become continuous, Sam Palmer, managing director and head of strategy, digital wealth planning & advice for JPMorgan Wealth Management, said during a panel discussion at Financial Planning’s INVEST conference in June.

“What has started with clients having to interact with an advisor, even to be able to trade stocks moving over through access to digital tools and automation, is [now] more tools in the hands of consumers for financial planning and financial health,” Palmer said. “We are able now to have continuous monitoring as an individual [and] as a consumer of my cash flow."

This eliminates the need for simple one-off conversations with an advisor.

Providing clients with access to wealth management tools and other services through AI is a leading trend among advisors. Recent examples of this include Fidelity, which is allowing consumers to compose custom indexes and invest in chosen stocks for a monthly fee amidst the rising popularity of direct indexing. Other firms such as Regions Financial and Ally Financial are blending human and robo advisors for clients who prefer differing levels of interaction.

Donna Alberico

But despite the benefits afforded to wealth management professionals through AI-powered automation, many firms still utilize a hybrid model ensuring human interaction is still a key element in the advisory process.

“Portfolio management is something that's automatable and something that people will be willing to have machines be more involved in," said Iraklis Kourtidis, co-founder and chief executive of the software development firm Rowboat Advisors in Menlo Park, California.

This frees up people to work on high-level tasks such as determining the right portfolio based on the consumer's risk profile, Kourtidis said. 

Using the additional resources that would have otherwise been occupied by the tasks now handled autonomously, advisors can now look more deeply into the complex issues plaguing clients.

“What advisors need to do and are recognizing, particularly the next generation of advisors, is that they need to be solving clients' bigger problems by throwing themselves in the middle of everything going on in [their] lives and solving those problems,” said Andrew Altfest, president of the New York-based registered investment advisory firm Altfest Personal Wealth Management.

By freeing up resources through the use of AI, wealth management experts can expand access to valuable financial advice for those who were previously deemed undercapitalized, Altfest said.

“The only way you're going to be ever able to do that at scale is by using technology, and especially AI," Altfest said. ”AI is now allowing us to be able to figure out what's going on in someone's life and get to those advice opportunities. … The advice scale is the most exciting thing to me and it's allowing us to kill the sacred cows of" only being for the wealthy.