AI in Wealth Management: Where We Are and What Comes Next

Article by Jim Roth

A fixture in the 24/7 news cycle as well as most corporate budgets, AI has earned its place as an integral part of the business landscape. Of course, it is difficult to strategize how an ever-evolving resource like AI will influence your firm’s strategic long-term planning efforts. Investing in the unknown has never been a blueprint for success. AI might be the exception. Firms are seeing success in leveraging AI to address the most prevalent pain point for both advisors and their firms: redundant manual work that, while necessary, detracts from the core, client-facing services advisors want to focus on. Currently, the majority of wealth management firms are leveraging AI across operational areas such as compliance, marketing, transitions and more, with Zocks reporting that financial advisors are saving 10-plus hours per week on administrative tasks.

Peter Dun, co-founder and CEO of Feathery, says, “The biggest gains today come from eliminating manual data work. AI that reads statements, tax returns and IDs, then prefills onboarding and account-opening paperwork, is turning days-long processes into minutes and freeing advisors to focus on clients.”

Where we are falling short

 We’re just scratching the surface of ways AI can transform an advisor’s day-to-day. While there’s a long runway for AI capabilities, industry tech leaders are already looking out into near-term functionality that can further impact advisor businesses. One key to optimizing outcomes will be deploying AI as a planned, integrated, firm-level tool and not a series of ad-hoc add-ons. Michael Wood, CEO of Domify, notes: “It’s true, we have seen a lot of early AI adoption, but most of it has involved individuals seeking incremental productivity gains. Making an optional tool available to your people is different from implementing AI within the enterprise to create real operational leverage. When I look ahead, I see winning firms leveraging AI to achieve real scale, with faster growth at a fraction of today’s incremental costs. In that regard, I believe the real opportunity to differentiate is still on the horizon.”

Wood believes that future success has its roots in today’s decisions, but believes that AI may prove to be more forgiving of short-sightedness because of its tractability, saying, “When considering technology implementation within the enterprise, forward compatibility has traditionally been a major concern. Mistakes with legacy technology are hard to unwind. But the right AI-native solutions offer an advantage because they can adapt.”

Other wealthtech experts believe the wealth management arena is not yet seeing the expected ROI on AI investments. With upwards of  68% of industry firms using AI in some capacity, falling short in this area has far-reaching repercussions.

Sindu Joseph, CEO of CogniCor, says, “Today’s RIAs are already using AI applications that serve specific purposes, such as note-takers or form completers, or more general products, such as Claude or ChatGPT, that have made a meaningful impact on the efficiency of specific actions within these firms. Those investments are made – but aren’t providing sufficient returns.”

Joseph believes this is not an insurmountable problem, but one that can be overcome with coordination: firms must manage their multiple AI tools, interfaces and data sources so they operate as a unified system. She says, “Individual applications fall short because they don’t communicate with other parts of the firm, resulting in isolated data that can lead to incomplete information and recommendations. The investment that firms should make is in an AI orchestration platform to bring all of this data together to drive efficiency and productivity. Without this high-level orchestration, these tools can’t reach their full potential.”

What the next frontier looks like

 Much of the excitement around AI centers on its seemingly limitless potential to drive a fundamental shift in how advisors can and will work. Using AI-driven efficiency-building tools is an increasingly standard business practice and is already laying the groundwork for other use cases to address important industry issues.

However, challenges remain. Sam Kendree, CEO & Co-Founder of WealthFeed, believes, “Organic growth is the logical next step, and most firms already own the AI to pursue it. Every major CRM and marketing platform now has tools that can draft outreach. What those tools usually lack is useful information about the person on the receiving end. An advisor who knows a prospect recently sold a business or shares a mutual client has a reason to call. Without that context, the advisor is guessing, and AI just helps them guess faster. Referrals have always converted well because they come with context. The smarter investment is data that gives outreach the same advantage.”

For Feathery’s Dun, firms should focus on the big picture and take a tree-top view of the business in order to bridge gaps within their workflows. “Most firms are still applying AI to isolated tasks. The next gap is end-to-end execution: AI that understands a client’s full picture, routes work across custodians, CRMs and compliance systems and flags issues before they become NIGOs. With AI now widely available, the differentiator is no longer having it. It’s how deeply it’s embedded in the workflows of clients and advisors.”

Joseph concurs, saying, “It's sort of like using a forklift to do school pickup and a minivan to move pallets of packages. It’s technically possible, but applying the right tool in the right place will yield better results. To do that, you need a full picture of the operation.”

Jim Roth is a partner at Ascentix Partners, a network of elite strategic consulting and M&A advisory firms that specialize in accelerating value creation for wealth management enterprises.