Most advisers view AI as essential to business operations, especially to help combat ongoing fee compression. But AI can do more than lower costs and increase efficiencies, said Raj Madan, Pershing managing director of technology. He sees the technology helping advisers with prospecting, compliance, improving the customer experience and helping advisers make services more personalized.
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It ultimately comes down to helping advisers profitably serve many more customers, while not ignoring their largest accounts.
Right now many advisers may not even know the benefits they receive from AI, but the new technology has vastly improved the custodian's abilities to prevent fraud and money laundering.
"What's funny about this is sometimes they don't even know it's happening," Mr. Madan said, comparing it to how advisers use Google Maps daily without realizing the amount of AI that's powering the app. "In the wealth management space, this is something that is happening, but it's happening in the background. Things where [Pershing is] doing Automated Clearing House (ACH) anomaly detection and confirming if the ACH is within a certain threshold for that particular entity. If it isn't, we classify it as an anomaly and have someone go and check it out."
Pershing is also combining Optical Character Recognition, where a computer can convert images of typed or handwritten text into an electronic document, with machine learning to automate and improve Automated Customer Account Transfer Service (ACATS) workflows. If done correctly, the program should be able to inform advisers when a mistake is made and should become better at recognizing mistakes over time, Mr. Madan said.
In the front office, Mr. Madan said Pershing is using natural language processing to make it easier for advisers to find the appropriate report or form they need from a database. Rather than browsing through thousands of options, advisers can simply type in a question and the appropriate document will be pulled up.
"That's an example of using AI for the direct benefit of the adviser, and something that is in production now," Mr. Madan said.
The firm also is exploring how AI can help advisers with client attrition, something Salesforce has demonstrated with its Einstein AI product.
"When I look at investors' behaviors on my platform, I can actually correlate previous behaviors of an investor and an attrition event, he said. "I can actually provide the adviser via dashboard … a 70% probability that this investor right now is considering leaving you."
In the future, he believes AI can help advisers predict when an investor is going through a major life milestone — like having a child or buying a home — and recommend new business opportunities for the adviser. It will also help advisers offer value beyond investment management, such as advising on healthcare issues based on data trends.
"What we're really aiming to do here is build a digital system that's really helping the adviser manage their businesses," Mr. Madan said. "All of this information is essential for an adviser to understand their investors when its important."