This content is from: Practice Management

With 95% Accuracy, This New Software Can Predict When Clients Will Leave

In March, Broadridge Financial and AI firm Fligoo will launch proprietary software designed to anticipate investor behavior and improve advisor performance.

Broadridge Financial Solutions, the financial technology company that processes $8 trillion in U.S. securities trades daily, says its new artificial intelligence software can alert wealth managers of clients planning to leave with remarkable accuracy, and more.

A year ago, Broadridge partnered with AI company Fligoo and began building and testing a proprietary suite of services for financial advisors. On Wednesday, the company told RIA Intel it plans to officially launch the product in March.

The software suite is intended for banks and wealth managers, including independent RIAs, of all sizes. Users will not have to be existing Broadridge customers. The new analytics software will be capable of connecting to existing client relationship management systems, or CRMs, and other third-party software, Joseph Lo, vice president of Wealth Product Innovation at Broadridge, said.

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“We’re really excited about it because it represents a lot of what we’re trying to do with Broadridge Wealth, which is support advisors and help them provide the most personalized service possible,” Lo said.

Lo declined to share details of the partnership, including whether Broadridge is an investor in Fligoo. But the two companies have been working closely together for a year, he said. “We are really leveraging sort of a startup spirit and making huge strides every day.”

Using data from its marketing, communications, compliance, trading, and other existing wealth management services, Broadridge and Fligoo spent the last year building predictive models that advisors can use to inform all kinds of decisions. Fligoo CEO Lucas Olmedo said the new software will improve their performance on a daily basis.

One model, using data of an advisor’s previous clients, has shown it can predict when a current client is planning to leave a firm with between 90% and 95% accuracy, Lo said. In those cases, if an advisor does nothing, the client is almost certain to leave. But the software’s alert gives an advisor a chance to act and retain them.

A warning system like that would have been useful last year, as the Covid-19 pandemic disrupted wealth managers. On average, advisors who reported losing any business said they lost one fifth (21.7%) of their book, according to one survey.

But the artificial intelligence software does more than sound alarms, Lo said. “Predicting the future only has limited value.”

The software has also shown it can optimize advisor marketing. AI-recommended marketing messages had between three and four times ordinary engagement.

“That really blew me away because what an advisor struggles with is, of course, cutting through the noise. They don’t want to contribute to the noise. They don’t want to spray and pray,” Lo said, a reference to sending a high volume of less-effective messages in order to reach a certain level of engagement.

Broadridge expects to release more models and insights in the suite this year.

A survey of 100 wealth management technology executives found they largely agree that benefits of artificial intelligence are overhyped but it will ultimately change how they do business in the future. AI is "perhaps the most discussed 'new technology' and a full 84% of C-suite executives believe they must leverage AI to achieve their growth objectives," according to a report by Accenture.

"Investors expect advisors to understand their specific needs, and we are creating an end-to-end practice management solution with Fligoo that uses AI to enable financial advisors to anticipate investor needs at every moment of the investment life cycle," Michael Alexander, President of Wealth Management at Broadridge, said in a statement about the partnership. 

Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.

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