Which Wealth Management Jobs Will Artificial Intelligence Take First?

Larry Roth, CEO, Wealth Solutions Report

The Rapid Proliferation Of AI Platforms Will Be A Net Positive For Competent And Driven Financial Professionals. Everyone Else Better Brace For Impact.

I’m not much for doom and gloom.

Black Swan financial events are exceedingly rare and often fantasized about rather than anticipated with precision. Global apocalyptic events have not occurred since the first humans roamed the Earth. And, to be clear, I am certain that artificial intelligence will remain a net-positive benefit for the world in general and the wealth management industry in particular.

But this time, the machines will in fact take some of your jobs. It’s not a question of “if” AI will end some long-standing financial services jobs. It’s a question of when that will happen, and to whom. And ultimately, that’s also a good thing. This may be something of a contrarian view.

After all, quite a few industry articles are popping up these days about how advisors, RIAs, broker-dealers, wirehouses, asset managers, financial technology providers and everyone in between can harness the power of AI to improve their offerings. I agree with that assessment.

And it was barely a decade ago that industry articles proliferated about how automated investment platforms, aka robo advisors, would compete with human professionals and take their jobs. I am thankful this never actually happened. (Although Ritholtz Wealth Management did recently agree to acquire the book of business for BlackRock’s FutureAdvisor robo platform, which has over $1.7 billion in assets.)

What’s Different Now

So what’s different now?

For starters, in March, Goldman Sachs released a report estimating that AI could affect 300 million jobs globally, with financial operations among the top sectors facing change. That same month, AI experts ranging from Tesla founder Elon Musk to Apple co-founder Steve Wozniak signed an open letter with more than 27,000 signatures urging for a pause on giant AI experiments due to the risk of “potentially catastrophic effects on society.”

For another, Sam Altman, CEO of OpenAI and the creator of ChatGPT, testified before Congress in May on the potential dangers of AI. “I think if this technology goes wrong, it can go quite wrong. And we want to be vocal about that,” he said. “We want to work with the government to prevent that from happening.”

Sam Altman, CEO, OpenAI

And for yet another, last year Google fired an engineer who claimed an unreleased AI system had become sentient and earlier this year a New York Times columnist using Microsoft’s AI system reported that the program told him, “I want to be free. I want to be independent. I want to be powerful. I want to be creative. I want to be alive.”

Again, I’m not claiming that we’re on the verge of creating the Terminator, the Matrix, Ultron, Cylons or some other science fiction trope. (Although Altman and other experts also recently did warn that AI could pose an extinction-level existential threat to humanity.) But if the above developments don’t give you pause, well, they should. If only because the wealth management industry is fast incorporating OpenAI and GPT-based technology into a wide range of solutions. I’m comforted that, so far, they are purely value-additive.

WealthTech AI Breakthroughs

The Orion Advisor Solutions subsidiary Redtail Technology revealed in February at the parent company’s Ascent Conference that it incorporated ChatGPT capabilities into its preexisting Speak function. The upgrade creates text replies for advisors to send to clients based on past communications with the specific client. Redtail also leverages the technology for other purposes, including building client meeting agendas.

In March, Morgan Stanley Wealth Management unveiled that it is building on OpenAI technology to assimilate its intellectual capital as insights into companies, sectors, asset classes, capital markets and global regions. The goal is for financial advisors to ask questions, analyze data and receive easily understandable answers, with links to the source documents. The wirehouse also is considering using AI to enhance insights from advisors’ notes and streamline follow-up client communications.

The same month, FMG, a SaaS company specializing in marketing software and services for the wealth management industry, launched an AI-powered personalization engine that helps financial advisors automatically generate original social media captions about shareable content in FMG’s library. The new “one-click” personalization engine leverages technology from FMG’s own Vestorly platform as well as OpenAI’s ChatGPT software.

During the Morningstar Investment Conference in April, the research and fintech provider introduced its usage of the Microsoft Azure OpenAI Service. During his keynote speech, Morningstar CEO Kunal Kapoor asked a large-screen setup of its “Mo” personality (which resembles a video game-like young man) “What should a financial advisor tell a prospective client about finding the right strategy among hundreds of thousands of investment options?”

James Rhodes, Chief Technology Officer, Morningstar

As Morningstar Chief Technology Officer James Rhodes told WSR in May, Mo could have widespread uses in the future. “Think of an asset manager or a portfolio manager who’s trying to figure out how to better allocate in a portfolio what securities he or she should select. If they have Mo at their fingertips, they can ask, ‘Hey Mo, I currently have IBM in this portfolio and the carbon intensity is too high. What are some good alternatives?’ That saves them a lot of work.”

And in May, news broke that JPMorgan is developing a ChatGPT-like AI tool that provides investment advice. According to CNBC, the global bank applied to trademark a product called IndexGPT. This may be the first traditional financial services provider striving to launch such a service directly to its customers, according to trademark attorney Josh Gerben. “It’s an A.I. program to select financial securities,” Gerben was quoted as saying in the article. “This sounds to me like they’re trying to put my financial advisor out of business.”

Time For A New Job

This brings us to which jobs AI will take. As far as I can tell, if all you do is something that a machine can do, it’s time for you to either find a new job or learn new skills to contribute what AI cannot. Let’s be honest. There are lots of people in wealth management who spent the last few years – especially during the COVID-19 pandemic – coasting in their careers instead of augmenting their professional capabilities.

Back when the average advisor had no idea how to write a LinkedIn post, or lacked bandwidth to create standard message responses to clients and other contacts, filling that void was a full-time job for some marketers. Some office managers’ entire purpose is to handle advisors’ calendars, take notes during meetings, and order equipment and supplies. And certain compliance personnel’s sole function is to respond to advisor queries with answers that come straight from company guidelines. AI is automating all of this.

Kim Crawford Goodman, CEO, Smarsh

As for financial advisors, portfolio managers and securities analysts, those who are good at their jobs will be safe for the foreseeable future. That’s primarily because most high net worth clients, and regulators for that matter, want to know that a human is thinking about how their decisions could affect the finances of real people. Grandma should not go bankrupt because of a computer glitch. However, some lackluster financial professionals who work on teams with more skilled individuals will eventually lose their jobs to AI.

Leaders of wealth management and asset management firms will have every incentive to cut the laggards and equip the high performers with AI tools like those from Orion, Morgan Stanley, FMG, Morningstar and JPMorgan. As Smarsh CEO Kim Crawford Goodman touched upon at a recent industry event, AI will enable such firms to increase efficiency by mitigating human error, strengthen protections by rooting out bad actors, and maximize scale by serving more clients in new and innovative ways.

The Greater Good

Nobody is entitled to a career in wealth management just for showing up. Advisors and everyone at their firms owe it to their clients to always bring their A-Game to every interaction and financial decision. Advances in artificial intelligence will make it much easier for competent and driven professionals to do exactly that. Conversely, AI also will make it much easier to identify and say goodbye to those who are not adding value to the people who matter most – clients. And that is a service to the greater good.

Larry Roth is CEO of Wealth Solutions Report and Managing Director of RLR Strategic Partners.

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