We live in an AI world, and there’s no turning back…
Investment managers recognize a future with machine learning, with 91% currently or planning to deploy it.
And positive results bear out for businesses adopting new technology: 92% of large companies are achieving returns on their investments in AI, and a similar number are increasing their AI investments.
Just as there’s no turning back on AI, wealth and asset managers must remember: don’t turn your back on being human either.
In a rapid, at times frantic push in adopting AI, investment firms are doing to gain an edge on competitors.
From portfolio management to predictive analytics, from client communication to customized marketing campaigns, from due diligence to data analysis, there are many more AI use cases, of which we’ve discussed a few of them in our Generative AI for Wealth Managers post.
And according to Nvidia’s State of AI in Financial Services report, 70% of financial services respondents said they’ve seen revenue increases of 5% or more with AI, and 60% said AI helped reduce costs by 5% or more.
… but it’s not always so perfect…
AI MUST be used wherever appropriate, but without acknowledging potential risks, the output can leave a bad taste in the mouths of the consumer.
Speaking of, does anyone recall last year’s Coca-Cola Christmas ad?
To no one’s surprise, it was poorly received.
It was an AI-generated remake of the iconic and original version, a remake best described as lazy, soulless, and lacking human warmth.
Or how about the AI chat bot that swore at a customer?
And plenty of other examples of big businesses hurting their brand image with AI fails…
For an investment firm, the stakes are much higher than Coca-Cola losing a few dollars and customers (temporarily) over a lazy ad.
You are in the business of trust- and relationship-building, managing people’s hard-earned money. Investment management is an extremely personal business.
Without using AI properly, you risk losing client trust and business permanently.
Potentially wrong analysis and advice, tone-deaf or insensitive messaging in client and marketing communication, over-reliance on chat bots when clients want humans…
Again, this is by no means to discourage use of AI, but be very strategic and deliberate in its usage.
Despite productivity and financial gains from AI, humans crave connections with other humans.
According to research from UK financial services review provider Smart Money People, 48% of customers’ biggest complaints was having no access to human support. They also lamented no available phone number (32%) and an over-reliance on chatbots (24%).
With more AI, people are getting better at detecting AI-generated content, and once they find it, they don't view it favorably.
Even merely suspecting something to be AI, it’s quick to be devalued and dismissed, as marketing expert Neil Patel pointed out.
People are done with AI slop, and the last place they want it is from their investment advisors.
The desire for human output and authenticity remains...
The more artificial intelligence, the more value there is in being human... when leveraging human strengths of course.
And the World Economic Forum also sees human capital as the new competitive advantage in a Gen AI era…
People like technology that makes life better, but they don’t want to live in an artificial world. They want the real world of humans and authenticity.
For investment managers, this means being human in areas that bring maximum impact to your clients, which in turn, helps the company bottom line.
It also means freeing yourself up to do those valued human activities, relegating non-client facing and non-core tasks to AI, intelligent automation, as well as third-party investment operations and technology experts like Empaxis.
Many of your competitors using AI will be tempted to shortcut their way at the expense of the human touch. Use their shortcomings to your advantage.
People make mistakes. They get tired, bored, stressed, distracted, sick... all this can negatively impact your work, especially when managing data and generating reports manually.
Even the smallest mistakes can be costly and run you into trouble with SEC compliance.
Manual, time-consuming work -- sifting through mounds of investment data, compiling it, and creating summaries and reports -- machine learning can review, streamline, and automate these processes.
There are many more use cases, but this is an example to get you thinking in the right direction.
Again, AI can handle data-heavy tasks, and it's meant to free investment managers up and deliver maximum value as humans.
For example, use AI for:
The human presence is most valued in scenarios requiring empathy, nuanced judgment, and trust-building, areas where algorithms fall short.
Clients often seek human advisors during periods of market volatility or life transitions (e.g., retirement, inheritance, or sudden wealth), where emotional reassurance and personalized context matter more than raw data.
Complex ethical dilemmas, such as balancing financial returns with deeply personal values (e.g., ESG priorities or philanthropic goals), also demand human sensitivity to navigate trade-offs and align decisions with a client’s unique worldview.
Ultimately, long-term relationship stewardship thrives on human intuition: advisors who remember family dynamics, interpret unspoken concerns, or creatively tailor solutions to evolving needs foster loyalty that purely digital interactions cannot replicate.
This is why it's so important to free yourself up of manual data managing, reporting, and other time-consuming admin-related work.
When deploying AI, the human touch will be lost to varying extents. The goal of course is to mitigate those losses, but in most cases it's inevitable to eliminate altogether.
That is why we say be strategic and aware of what you are willing to compromise in favor of AI at the expense of the human touch.
We know there are budgetary considerations. Humans can't do everything for everyone at once, and company finances have to align.
Consider these example tradeoffs:
With these in mind, develop strategies to handle these shortcomings.
No matter what, always give clients the ability and option to speak with a human.
The output is only as good as its input.
AI tools must be fed with the right data and details so that it can create more reliable outputs.
You will also need to give AI feedback with its output, constantly refining it so that future output will deliver closer to the desired results.
Take this activity very seriously. High-quality prompts will save you a lot of time from making corrections to output from not-so-great prompts.
Whatever the AI produces, trust but VERIFY. Would you accept the output if you were the client? Make sure it looks and feels like a human produced it.
Learn more about prompt engineering as the ultimate AI skill in investment operations.
This should be a cross-department activity, involving investment management, client servicing, operations, IT, compliance, HR, and sales and marketing teams.
Create official company policy around use of AI and relevant required documentation. Create guardrails, risk mitigation, and contingency plans.
All staff using AI tools should be aware of the rules and approaches. Assign team members internally to ensure best practices, be it the CCO and/or CTO.
Be proactive now. AI is still a bit of the "Wild West", but It's only a matter of time before the SEC (and other relevant regulatory bodies globally) step up their compliance requirements and beef up enforcement.
And don't forget to communicate transparently with clients about AI’s role to maintain trust.
We live in a AI world from here on out, and investment firms must fully leverage the AI tools available.
After all, those who don’t will fall behind.
And those who use yet lose touch with the human element, they too will eventually fall behind.
This presents a unique opportunity for wealth and asset managers to gain a competitive advantage by being more human than everyone else.
That means:
1. Being available, physically and emotionally (in person, phone calls, video conferencing).
2. Giving human advice, giving human analysis and interpretation of data, reports, and market happenings (with AI as a valued and necessary supplement).
3. Understanding emotional cues, hidden meanings, and unspoken rules behind the communication.
Remember, humans want empathy, connection, and the feeling of being heard and understood by other humans.
If you can free yourself up to do all things, you're giving clients exactly what they want.
Lastly, you'll see benefits to your bottom line and you will win the future.
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