LPL, Ameriprise wade into AI applications for advisors

'When I left Ameriprise earlier this year, the company was just starting to talk about AI,' one financial advisor said.

The CEOs of LPL Financial and Ameriprise Financial Inc., Dan Arnold and James Cracchiolo, last month touched on the potential applications of artificial intelligence and how it could fit into their firms, which combined have more than 30,000 financial advisors working as either independent contractors or employees.

CEOs of banks, broker-dealers, registered investment advisors, custodians, asset managers and fintech providers are grappling with forming a strategy for AI — a technology many thought was science fiction just six months ago.

“This quarter, we launched a new performance optimization solution called Practice Hub,” Arnold said on LPL Financial’s July 27 conference call to discuss its quarterly earnings. “Over time, we see Practice Hub becoming a key tenet of our advisor experience, leveraging the power of artificial intelligence to operate as a co-pilot for our advisors.”

“We’re also beginning to use AI and analytics to further enhance how we engage and work with clients,” Cracchiolo said during Ameriprise’s conference call to discuss earnings, also on July 27. “With AI, we can serve up real-time information to help advisors identify a possible next best opportunity for clients based on their needs.”

Eric Reinhold, who departed Ameriprise in March after a decade and is now a registered investment advisor with Eversource Wealth Advisors, noted, “When I left Ameriprise earlier this year, the company was just starting to talk about AI and how it could be incorporated into marketing.

“I still write a monthly newsletter to clients,” Reinhold said. “My practice is less about volume. The focus is quality, not quantity.”

Securities regulators who watch over the industry are also wondering how this new technology will work in the financial advice industry. Just this week, Massachusetts Secretary of the Commonwealth William Galvin announced that his securities division would launch an investigation into how firms are using AI to engage with Massachusetts investors.

“Eighteen months ago, we polled financial advisors, and 70% wanted AI from firms,” said Scott Reddel, managing director at Accenture. “What’s changed in the last six months is the arrival of ChatGPT, and that’s elevated not only the level of spending on the technology but how CEOs talk about it to the Street and the company.”

Morgan Stanley, for example has partnered with OpenAI, the company behind popular generative text AI program ChatGPT, to develop an AI assistant for its financial advisors that can quickly find information and get answers to questions. Thousands of Morgan Stanley advisors are currently involved in a beta test of the product, which is scheduled for companywide release in September.

A spokesperson for Ameriprise declined to comment on Cracchiolo’s comments about AI. LPL, meanwhile, is still working on the AI that will power the advisor portal Arnold mentioned, Practice Hub.

Ryan W. Neal contributed reporting to this story.