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What AI Can Do for Financial Advisors

January 30, 2018

Artificial intelligence is a tool that can help advisors gain scalability while meeting their clients’ growing demands — but they should start incorporating such technology soon to prevent it from disrupting their businesses down the road, Doug Fritz tells Wealth Management.

One of the aspects of AI providing early benefits for financial advisors is natural language generation, in which algorithms analyze data and put out readable text, Fritz, CEO and founder of technology and marketing consulting firm F2 Strategy, tells the web publication.

Research reports on funds and securities, for example, are increasingly generated by computers. And both advisors and clients are likely to embrace such reports even though they’re not written by humans, he says. Natural language processing, meanwhile, lets people request data using context sentences, and Thompson Icon can understand text such as “S&P 500 vs. MSCI last five years” to put out graphs and data, Fritz tells WealthManagement.com. Advisors can also benefit from machine learning systems, which analyze uncorrelated data to spot trends or make predictions, he says. Machine learning, combined with deep learning — which spots correlations across various data sets and tasks — will likely appeal to compliance staff for identifying risks and fraud, Fritz tells the web publication.

But because of current “data disorganization” — data sets vary across various platforms — cases of more comprehensive uses of AI “are still out of reach,” according to Fritz. And the use of machine learning tools such as IBM’s Watson currently require too big of an investment in staff for most wealth management firms, he tells WealthManagement.com.

An IBM Watson Promotional Robot (Getty)

But AI tools geared to a particular industry or function are easier for most advice firms to set up and see returns on their investment, according to Fritz. He points to Insight Engines for natural language search and Narrative Science for natural language generation as ones that could help advisors, WealthManagement.com writes.

However, many advice practices are falling behind in the use of AI, in part due to the “generational demographics” of the advisors, Fritz tells the web publication. And with time it will only become harder to adopt such technology into their business, he says. If advice firms wait too long, incorporating AI will become unnecessarily disruptive, Fritz tells WealthManagement.com.

By Alex Padalka
  • To read the Wealth Management article cited in this story, click here.