Investment Blog

Recently, I engaged with an AI team of experts to help them build AI-enabled software products for wealth management firms.

When I was approached for suggestions, I was intrigued by what AI could do to wealth management. It helped me learn about the possibilities of AI use in wealth management.

Many wealth management outfits in the US have started using AI in their operations and basic level of advice.

Even in India, many firms use algorithms to suggest investment options and portfolio allocation.

However, when it comes to money, many are still not comfortable dealing with machines. Machines can tell you what to buy and sell based on past performance (which could be misleading). But machines can’t help you manage your emotions, which is the most important aspect of wealth creation.

However, there is a strong scope for AI to replace many wealth managers.

AI could eventually take over such tasks:

– Investment recommendations based on past performance
– Standard asset allocation models taught in theory and even used by many wealth managers
– Service aspects regarding operations like transactions, reporting, changes in credentials, etc.

Those wealth managers who just do above-standard tasks are at a very high risk of losing their jobs.

Wealth managers who have or acquire the below skills are at the lowest risk of losing their jobs:

– Investment suggestions based on future outlook and not past performance
– Ability to understand factors leading to past and future outcomes
– Understanding of macro-economy and market cycles
– Understanding of behavioral science of investing
– And most importantly, empathize with the needs and unique situations of clients

It’s very difficult for AI to replace human emotions, connect & ingenuity, which are needed now and will always be in demand in a world run by machines.

In the new, brave world of AI, we need to be more human to stay relevant.

Originally posted on LinkedIn: www.linkedin.com/sumitduseja