At Future Proof, wealth management industry weighs realities of the AI revolution

For the around 5,700 attendees that hit Huntington Beach, Calif. for the Future Proof festival last week, AI was a hot topic as the wealth management industry weighed the impact of the increasingly pervasive technology.

“It's a revolution in many respects,” Ralph Haberli, CEO of Edelman Financial Engines, told InvestmentNews. Haberli pointed to “a ton of excitement” and “a ton of new capabilities” thanks to AI, but acknowledged that this can also be confusing and disconcerting for advisors.

The Edelman Financial Engines chief explained that, increasingly, clients come in having done AI research. “They've gotten the view on asset allocation, tax planning from Claude or ChatGPT or others, and it feels a lot like the WebMD search that we all used to do,” he said. “And then we go to the doctor and we'd say, ‘well, I clearly have XYZ illness’ and then she or he would say, ‘well, actually, let me look at you. No’.”

But the industry is shifting gears in its use of AI. The big news at Future Proof was undoubtedly AI heavyweight Anthropic’s launch of Claude for Financial Advisors in partnership with a host of major wealth management players, including Dynasty Financial and Charles Schwab.

While Edelman Financial Engines was not one of the Claude for Financial Advisors partners announced at Future Proof, Haberli explained that the wealth planning firm has been working pretty closely with Anthropic for about the last six months. Edelman Financial Engines, he explained, has “absolutely” leant in to AI. “We've taken the approach of, it's not AI just to AI, but it's AI to have a tangible impact,” he said, pointing to AI recording client meetings, helping prepare for meetings, and improving workflow.

“We've heard from multiple of our best planners that describe just in the last 6 months how their practice and how they work is radically different and radically better,” Haberli said. “So, we're very much excited about the impacts of it - but we're trying to keep it tangible and real, and we can point to the before and after, and that's been a good guide for us.”

Vanguard was one of the Claude for Financial Advisors announced at Future Proof.  “We are working with [Anthropic] to serve up our asset allocation, our portfolio construction through our model portfolios,” said Eve Cout, head of advisor solutions, financial advisor services at Vanguard. “Our models are used by advisors as they think about a starting point, as you know, as they start to build portfolios.”

 “And if they're going to do it in Anthropic, in Claude, we want to make sure that information's there and they can just easily access it,” she added. “So, we love the idea of working with Anthropic and Claude to just kind of serve up this information where advisors are looking for it.”

Research released by Vanguard at Future Proof found that while AI adoption is widespread, advisors are mainly using the technology to support administrative tasks, such as drafting emails. Essentially, the study found that advisors are still “scratching the surface” of AI’s potential.

“The true unlock is not just using AI and using the tool, it's how that enables them to spend more time with clients doing the things that clients actually value, which is behavioral coaching, financial planning, building that trust, that empathy in the moments that matter,” said Cout.

Fintechs were also out in force at Future Proof. WealthStream, which provides advice intelligence for the wealth management industry, used the event to add OpenAI’s GPT-Live-1 to its Practice product. GPT-Live-1 is a conversational voice model and Practice is designed to help financial advisors prepare for client conversations. With the addition of GPT-Live-1, WealthStream wants to bring natural voice conversation into those preparations. “We really apply AI to improve the quality of advice,” Wealthstream co-founder and CEO Dan Daum told InvestmentNews.

However, Kevin Knull, CEO of TaxStatus, took a slightly different tack at Future Proof. He told InvestmentNews that the TaxStatus fintech platform, which provides data sourced from the IRS for advisors and accountants, doesn’t rely on AI. “I think it's complementary [to AI],” he said.

Knull, who is also the co-founder of AI company Advice.ai, explained that TaxStatus is all about data, rather than AI. “AI doesn't matter if you don't have good data,” he told said. “As much as people are so focused on which AI model they're using and how they're using it, they really need to start with the data first, because if you're using AI on top of bad data, it magnifies the problem.”