There is a perception of wealth management as a sector that traditionally relies on a personal touch. Investment advisors counsel clients on how to achieve their individual investment goals, based on their innate market understanding and instinct for a deal.
Although that was probably once true, it’s a time that has long since passed. Many wealth managers have invested heavily in digitalisation to enhance their personal interactions with clients, and advisors are far more aware of the need to embrace technology, especially to make better use of the data they hold.
Yet of the technologies that have been invested in, Artificial Intelligence (AI) has its limitations. For wealth managers to thrive in 2022 and beyond, AI must be further enhanced, and augmented intelligence – which combines the power of AI with humans’ imagination, intuition and intelligence – is the answer.
An industry in flux
The High-Net-Worth Individuals (HNWI) and Ultra-High-Net-Worth Individuals (UHNWI) who comprise the majority of wealth management clients belong primarily to a socio-economic grouping that is generally less receptive to technology than others. This means that there has been less incentive for wealth management firms to make more proactive use of innovative technology.
But HNWI and UHNWI demographics are changing, and the new wave is far more receptive to technology. Data is becoming intrinsic to successful wealth management. Wealth managers need to utilise data analytics tools and get as much insight as possible from the data they hold on their clients and markets.
Yet AI has its limitations here. Although it can provide information to wealth managers, AI has no instinct, creativity, or ethics. It presents information dispassionately and without intent, which limits its usefulness.
There are also issues around AI and access to data. Much of any organisation’s data is siloed, making it much harder to view it in context and see the bigger picture. Furthermore, the most insightful data for wealth managers is invariably the unstructured data – the call notes, client emails, financial alerts and premium data sources. Yet, most organisations and their AI solutions don’t have the appropriate technical solutions in place to work with unstructured data scattered across different systems, leaving these insights unused.
The role of augmented intelligence
Augmented intelligence delivers the insights that allow wealth managers to perform even better for their clients. Starting with an insight engine, which allows wealth managers to leverage unstructured data quickly and efficiently, augmented intelligence supports and enhances many further areas. Cognitive search, for example, can improve access to information and business efficiency but augmented intelligence goes even further, using Natural Language Processing (NLP) across all data, and then marrying that data with the user’s context and intent to deliver even better results.
Augmented intelligence can provide tangible and specific benefits to any number of business functions. For example, risk assessment in investment is always vital, so an augmented intelligence solution can connect data sources and apply NLP and Machine Learning (ML) to them. It can then use that insight to monitor all potential risk factors. Lastly, it provides wealth managers with next best action recommendations to help actively assess and mitigate ongoing risk levels.
Deal sourcing and sales
A key element in successful wealth management is monitoring the markets and understanding what investment opportunities are available for clients. Augmented intelligence can do this in real-time, delivering insights on a particular client to the wealth manager, as and when things on the market occur.
Wealth managers can quickly see what opportunities are available and then approach their clients.
It can go even further than this too. Augmented intelligence solutions can provide next best action recommendations on which opportunities are likely to be of most value and interest to a client. This digital-first approach is becoming more common in wealth management and the wider Financial Services industry.
In fact, digital-first is becoming crucial. Recent Accenture and Orbium research revealed wealth managers expect to lose nearly one-third (32%) of their clients’ wealth through intergenerational wealth transfers over the next 30 years. Much of this will be due to wealth managers lacking a customised approach that appeals to digital natives in the next generation of wealth. Using augmented intelligence clears the way for a brand new future of sales within wealth management.
Improved customer experience
One of the concerns that wealth managers have had about tech is that it will take away from the more interpersonal engagement that the sector traditionally relies on. But using augmented intelligence will improve the customer experience, enhancing a wealth manager’s experience and intuition with data-driven insights.
But intuition and knowledge are not enough. A wealth manager’s talents need to be enhanced with technology that can gather and process data from disparate sources to provide valuable information for effective customer engagements. This makes communication smarter and more meaningful.
The wealth management industry is in the midst of change. There is an increasing awareness in the industry of the need to get more value from data, make better use of technology and meet the requirements of the more digital-focused next generation of wealth. The best way of doing so is via augmented intelligence, which provides a more data-driven experience without losing any of the personal elements that have always been so important in wealth management.
About the author
Dr. Dorian Selz is the CEO and co-founder of Squirro, which works with organisations to bring them greater insight from their data.
