It’s early, but the biggest technology story in 2023 so far is the sudden explosion of interest in artificial intelligence.
Once one of the buzziest terms in tech, AI took a backseat in recent years to things like cryptocurrency and the metaverse. But as those turned out to be over-hyped at best or outright frauds at worst, AI came back with a vengeance in 2022, with new applications that can create images or text based on just about any prompt.
The commercial applications are wide-ranging and only getting started, and it’s just a matter of time before this technology makes its way into wealth management. To test it out, I asked some of my friends questions they have about finance and fed them to ChatGPT, arguably the most successful of the current wave of generative AI. I then showed ChatGPT’s responses to financial advisors and asked them to evaluate them without knowing they were generated by a computer.
The results were pretty interesting. While one advisor guessed that the answers came from ChatGPT, the others had no idea. While they would have made slightly different recommendations and agreed that the answers were pretty vague, they also agreed that the advice given was pretty good, actually. Not good enough to threaten a human financial advisor, but good enough to answer basic questions for someone just getting started.
I’d love for you to check out the story and let me know what you think. AI is going to be a huge story for advisor fintech for the rest of the year, and advisors need to start thinking seriously about how this technology can play a role in their practice.
Otherwise, this week in Fintech Bytes we have a couple of stories affecting international wealth management market, as well as a new startup that’s getting funding from financial advisors.
IG Wealth Management, a Canadian firm with $113.7 billion in assets under management as of Nov. 30, has agreed to continue using fintech company Broadridge Financial Solutions’ R.Broker product for another five years. IG will use Broadridge’s core record-keeping, regulatory capabilities and other tools for processing across currencies, dealers, regulations and jurisdictions.
Broadridge is best known for providing the infrastructure to support investor proxy voting, but the company has been trying for years to expand into a more general provider of fintech for wealth management firms. While reaffirming its relationship with IG is undoubtedly a big win for Broadridge, it’s unclear how much traction the company is getting in the U.S. market.
A startup is hoping technology can explain in real time why stock and ETF prices are moving, and the company, MarketReader, just closed $3.1 million in seed funding to make it happen. The tool is being built specifically for financial advisors and wealth managers, and MarketReader plans to launch in 2023.
What’s most interesting to me about this fundraise is that it was led almost entirely by financial advisors and family offices. As Michael Smith, managing partner of Oakridge Management Group, said in a statement, “I could easily see every financial advisor in the US eventually integrating real-time market analytics, like the ones MarketReader is pioneering, into their daily workflow.” This could be an interesting startup to keep an eye on.
Finantech SpA, a reporting fintech based out of Santiago, Chile, has been purchased by First Rate, an Arlington, Texas-based provider of wealth management technology. First Rate plans to use the acquisition to seed a locally run office serving the Latin American region.
Given how difficult 2022 was for many startups, as well as the competition they face from broker-dealers, TAMPs, custodians and more established fintech providers — some of which have grown quite large through M&A — it's perhaps not surprising to see companies start to look internationally for opportunities. With venture capital likely to remain tight for the foreseeable future, entrepreneurs might need to consider leaving an already saturated U.S. landscape.
Elsewhere, Ameriprise added a $470 million Wells team in New York, while an ex-Morgan Stanley advisor bolsters UBS' Austin, Texas office.
Financial advisors play an essential role in helping small business owners navigate their transition out of the company — and into retirement.
NFP data shows an engagement gap is holding back retirement readiness despite high trust.
Alan Feutz leaves the wirehouse in Illinois, while a team of five make a break from their Connecticut firm.
“The White House has extremely strict ethical guidelines with respect to issues like this,” said Press Secretary Karoline Leavitt.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
