The development of artificial intelligence technology for financial advisers so far has been dominated by the largest firms, but new startup ForwardLane is hoping to level the playing field for small and midsize advisers.
ForwardLane has an expanding menu of AI tools that firms can customize for various uses, such as automating research before client meetings, recommending and prioritizing adviser actions, and powering client engagement tools like question-and-answer chatbots.
Founded in 2016 and developed in the New York FinTech Innovation Lab, ForwardLane has raised $6.3 million over the last eight months and has partnered with Morningstar, Salesforce, Pershing, IBM Cloud and Thomson Reuters Wealth Management.
The company's goal, according to CEO Nathan Stevenson, is to provide configurable software that helps firms more effectively leverage data and make advisers' day-to-day work faster and easier.
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"How can an adviser deliver the same level of personalized service as to their top client all the way through their book of business?" he said. "We spent a lot of time in the marketing trying to discern what firms are interested in. Forget about the word 'AI.' What can we do for you as an adviser that would be helpful?"
It sounds a lot like Morgan Stanley's Next Best Action engine, which a recent report on AI and wealth management by Aite Group noted is the first AI product on the market from a major financial institution.
Next Best Action is possible thanks to the massive investment Morgan Stanley made in building a modern database capable of capturing and preparing its massive set of both structured client data and unstructured data, such as emails and adviser notes. According to Aite, "effective AI depends upon clean, accurate and complete data," and most firms still rely on disparate, often outdated systems and multiple third-party technologies.
"The mundane is so often the hinge to good business actions," Aite senior analyst Denise Valentine wrote. "This data complexity burden is systemic to the complex industry. Without data accessibility and proper preparation for use, AI tools will not be of value to the firm."
Morgan Stanley declined to comment on this article, but chief analytics and data officer Jeff McMillan previously has called the database one of the firm's most important projects of the past few years.
But few firms have the resources Morgan Stanley does to invest in building out a proprietary AI engine or the database it requires, and Mr. Stevenson believes ForwardLane can be the solution. Just as companies like SigFig built digital-advice platforms for financial institutions who decided not to build in-house, ForwardLane wants to build AI.
"If you have a billion a year to spend on this, you're Morgan Stanley," Mr. Stevenson said. "What we designed is essentially a generic framework that treats all data, no matter where it comes from, in the same way."
It remains to be seen whether advisory firms, many still trying to figure out digital advice, are ready to make the leap into artificial intelligence. Will Trout, head of wealth management at Celent, said he has questions about ForwardLane's commercial prospects.
From a functional standpoint, however, he's impressed.
"To me the power of the idea is straightforward, in that artificial intelligence can address challenges related to discovery and cognitive limits," Mr. Trout said. "How can the adviser address issues that are not even on his radar? Automating discovery through data mining and pattern recognition can help flag or highlight areas that the human adviser would not otherwise uncover."