Wealth management executives aren’t completely sold on the impact that artificial intelligence — computer algorithms designed to make decisions — will have on their companies. Or are they?
Accenture, the management consultant and technology services company with more than 500,000 employees, interviewed 100 C-suite executives in wealth management in October and found many are skeptical of AI; 85% said its impact is “more hype than reality for businesses today.”
But actions speak louder than words.
Sixty percent of executives told Accenture they’re already using artificial intelligence in their organizations, 28% are scaling or expanding its use, and just 12% are only planning to use AI or experimenting with it.
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Executives believe they must leverage AI to achieve their growth objectives, according to Accenture, and 84% of executives said AI will “fundamentally transform the wealth management industry over the next 5 years.”
Artificial intelligence has many applications in financial services. Financial advisors already use it to pick stocks, uncover harder-to-find bonds, and identify common characteristics of existing clients so they can seek those out in prospects. Last year, Charles Schwab partnered with a third-party AI company to analyze 2.5 million of the phone conversations with RIAs.
Accenture found the wealth managers it interviewed were using AI across client-facing and advisor-facing parts of their businesses, as well as operations. About half of the firms that have deployed AI are using it for marketing and prospecting, investment recommendations, an automated paraplanner, and/or client onboarding.
AI is expensive to develop and the benefits might not be clear, especially while programs learn and adapt to new inputs.
But like the executives, Accenture also foresees that investment being worth it.
“While they won’t be immediate, notable cost savings could be achieved by those who lean into using AI," according to Accenture’s recent AI in Wealth Management survey. Although a majority of respondents believe AI-driven savings will be less than 20% in year one, they expect that benefit could double in two to three years,” the consultants said in its report.
Executives surveyed were in the U.S. (85%) and Canada (15%) and worked for a range of company types and sizes, including RIAs, private banks, the so-called wirehouses, and multi-family offices. Ten percent of the organizations had more than $1 trillion under management while 46% had between $501 billion and $1 trillion, and 44% had $500 billion or less.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.