‘The best is yet to come’ for AI

Michael Alexander of Broadridge and Andrew Altfest of FP Alpha

Broadridge survey finds 75 percent of firms are confident about their tech offerings.

If the Terminator movies were right about one thing, it’s that the machines – and humans’ trust in them – are indeed rising.

A recent Broadridge study found that financial services firms expect to maintain or increase their investments in next-gen technologies like AI, quantum computing, crypto and digital assets, and blockchain over the next two years, with wealth managers looking to increase their investment in AI technologies by 28 percent.

In addition to that, 75 percent of financial services firms are confident about their tech transformation road map, but the study sees a digital maturity gap growing between leaders and non-leaders.

Michael Alexander, president of wealth management and global managed services at Broadridge, says the “maturity gap” shows that bigger firms, which have more discretionary dollars to invest, are doubling down, whereas other firms are “just putting their foot in.”

“That gap is widening because of the level of investments that these firms can make, and there’s also challenges to making this work,” he says. “Part of the maturity gap [or the gap in investments], it relates to how modern your technology is.”

Alexander is quick to point out Broadridge has modernized its systems, making them cloud-enabled and keeping its data all in one place.

“It’s the same data,” he added. “Not having data harmonized is a big challenge to overcome. So the gap comes from the ability to spend, but also how positioned are you to take advantage of it? Some firms are still waiting to see if regulators are going to weigh in and to what degree, so it’s like any kind of new fab.”

The survey also shows that 91 percent of wealth management professionals are investing in cybersecurity technologies, 83 percent in data visualization tools, and 58 percent in AI. Additionally, 80 percent of wealth management professionals agree that AI will lead to significant improvements in the customer experience.

In a recent InvestmentNews interview, Andrew Altfest, founder and CEO of FP Alpha and president of Altfest Personal Wealth Management, cited several use cases for AI, one being the area of digital marketing.

“When it comes to content marketing, which is a very important part of advisors’ marketing today, it’s been a struggle to generate content,” Altfest admits. “An advisor today using AI can go and give a very short presentation, have that presentation then turned into multiple articles, blog posts, tweets, LinkedIn posts, without having to spend any more time.”

Altfest added that AI has helped him grow his practice much faster by providing targeted content, which helps him and his team understand who is engaging with it and allows them to “personalize outreaches to those people.”

Some, however, aren’t too trusting of what AI can do. JPMorgan Chase & Co. CEO Jamie Dimon recently highlighted in his annual shareholder letter that the consequences of AI “will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years.”

Alexander says the survey’s main takeaway for investors is that they should understand how firms are using these technologies and they should be comfortable that their data is secure.

“They should continue, as they always have, to put demands on the industry to give them services that are highly personalized, and relevant … They need to make sure that we know their preferences, their sentiments and their values so that we can deliver things in a highly personalized [and simplified] manner,” he said.

As for his advice about using the tech, Alexander says firms need to figure out what their short- and long-term visions are.

“How do you address the challenges? Whether it’s upscaling, whether it’s increasing adoption, whether it’s simplifying, but all of those things are needed to accelerate it at this point,” he says.

Firms would also be smart to recruit people from outside of the industry, Alexander says. “People in our industry are hiring more behavioral scientists so that you can really personalize things, hiring more artificial intelligence engineers, more cloud professionals. So it’s still in the early stages but it’s going to rapidly transform.”

Alexander says while the results of the survey might be similar to the advisory industry’s views on the internet 30 years ago, this is the worst these technologies are going to get.

“They’re only going to get better,” he said. “We have to make sure that they’re safely and securely used so that we maintain the trust and respect from our clients and the people that use our technologies. But the best is yet to come.”