This article appears in the February 2022 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.
Artificial intelligence (AI) used to be the stuff of science fiction, but technology improvements in the past 10 years have propelled it into the mainstream. Today, everything from your mobile phone to your car uses AI. How can you use it to run a smoother, more productive practice?
AI’s power lies in its ability to mimic human tasks. Traditional software is good at solving problems with clear right or wrong answers, such as the price of a particular mutual fund unit. AI excels at more nuanced tasks, such as recognizing speech, distinguishing a picture of a cat from a picture of a dog, and even interpreting the tone of someone’s email. A human being might take just a few seconds to complete these simple tasks. The beauty of AI is its ability to complete thousands of such tasks each second.
AI tools for financial advisors span two broad areas. The first targets office productivity functions that can make every professional’s life easier. The second focuses on specific applications for the financial services industry.
Microsoft Corp., which has captured the office productivity market with its Microsoft 365 suite, incorporates an array of AI capabilities into the software powered by the company’s cloud computers, said Amy Young, digital strategist for financial services with Microsoft in Redmond, Wash.
For example, AI-powered natural-language processing transcribes meetings directly from within Microsoft’s Teams conferencing platform, Young said. It’s designed to produce a written version of a call or video session in seconds, whereas a human transcriber might take hours. Other providers, such as California-based Otter.ai Inc., also handle transcriptions in the cloud.
Microsoft’s Power Automate tool enables users to automate tasks. This tool includes an AI Builder with algorithms to make those automations more powerful.
“This includes being able to track sentiment and even tailoring followups based on sentiment,” Young said. AI can infer a customer’s mood from what they say during a meeting or write in an email. That can help you understand your clients’ implicit needs and be more responsive to them.
AI algorithms also can help you respond more quickly and consistently via email. Both Microsoft Outlook and Google LLC’s Gmail email service use AI to suggest possible replies when you are responding to an email with a short message.
AI-powered emails complement other capabilities, such as the meeting scheduler function in Microsoft’s Cortana virtual assistant. Adding the assistant to an email thread will prompt it to find the best time to meet with other participants based on each of their commitments. Cortana can even automate responses to meeting invitations. Another option is a free smart calendar assistant called Clockwise, which works with an existing calendar app to schedule and shift meetings to convenient times. Clockwise also can be integrated with popular non-calendar programs such as Slack and Zoom.
Better financial planning
While AI is powerful in general office productivity, it becomes even more beneficial in functions specific to the financial advisory business.
Jason Pereira, partner at Toronto-based Woodgate Financial Inc., which operates under the IPC Securities Corp. banner, points to financial planning software as an area in which AI technology can have a powerful impact. He cites Conquest Planning Inc.’s financial planning software as an example.
“With most financial planning software, you have to basically use trial and error,” Pereira said. Each financial strategy an advisor develops requires painstaking calculations to anticipate all possible outcomes. “This product will test all your strategies simultaneously.”
Using AI to crunch those numbers lets you test more possibilities for clients, he said.
Better storytelling for clients
Creating those investment strategies is one challenge. Communicating them to clients is another. Young points to Belgium-based InvestSuite, which uses machine-learning algorithms as part of its StoryTeller storyboarding product.
“It trains models that will take the data that goes into a client statement and create narrative summaries about it,” Young said. StoryTeller digests news articles and finds the most important events that contributed to financial performance, summarizing the news into a digestible format that helps clients understand portfolio performance.
What’s next for AI
The future is bright for this technology, Young said. For example, regulators are increasingly focused on protecting vulnerable clients, such as those with basic cognitive decline. AI can aid you in detecting this decline, she said.
AI’s ability to read between the lines by analyzing conversations and even transactional paperwork could be helpful regarding compliance, Young added. A client might claim to be a sophisticated investor, but signals in transcriptions and other data may suggest otherwise. That would be useful information for compliance departments, she said.
As AI’s capabilities increase, the financial services industry will keep producing tools for everything from better Word documents to better portfolio management. Eventually, that progress will outpace advisors who don’t enhance their services, said Darren Coleman, senior vice-president, private client group, with Toronto-based Coleman Wealth, which operates under the Raymond James Ltd. banner.
“If you’re an advisor and all you do is just pick securities,” Coleman said, “you’re going to get replaced by a machine that can do that.”