AI technology / Alashi

Artificial intelligence (AI) can help advisors start conversations with clients who are likely to leave, generate proposals to prospective clients and avoid billing errors, IT vendors say.

Preparing a proposal for a prospective client can take a lot of time, said Joseph Lo, head of enterprise platforms with New York-based Broadridge Financial Solutions Inc. The vendor is currently testing AI software designed to generate proposals more quickly and to help advisors decide what action they should take, such as recommending RESPs to a prospective client who has children, Lo said. Broadridge is aiming for “wider rollout” later this year.

AI has a wide range of uses in wealth management, including optical character recognition (scanning typed or handwritten documents into word processors), identifying errors in fee calculation, lead generation, portfolio construction and chatbots that use natural language processing.

For example, Toronto-based PureFacts Financial Solutions Inc. is using AI to look through advisors’ books of business and find similarities among clients, said Mehrnaz Shokrollahi, AI team lead with PureFacts. The technology then segments the clients into different buckets — based on factors such as how frequently they make contributions, assets under management and age — and feeds that data into a model.

The software can then identify which clients are most likely to leave by looking at past client behaviour. The characteristics that determine a client’s flight risk are unique to each firm because the machine learning model is re-trained with a firm’s data, and not with other firms’ data, Shokrollahi said.

With its technology, PureFacts aims to give an advisor a “conversation starter” if the AI predicts a certain client is likely to leave, Shokrollahi added. For example, the AI might find that older clients are more likely to leave than younger clients, so an advisor could suggest a decumulation product from their own firm, and dissuade the client from moving their assets into a decumulation product with a different firm.

Another PureFacts AI product available now to advisory firms is designed to predict when the data used to calculate fees is incorrect, PureFacts CEO Robert Madej said. The idea is to catch an error before the client is billed instead of having to take the time and effort to reverse an incorrect fee after the client is billed.