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Revolutionizing Wealth Management: The Gen AI Advantage

Gen AI is revolutionizing wealth management by accelerating innovation. Ultimately, this is leading to increased profit margins and improved customer experience. Notably, prominent wealth managers like Morgan Stanley have embraced Open AI’s technology to elevate their wealth management services, setting a trend with others following suit.

As Gen AI picks up pace, exploring areas for quick transformation is a critical step wealth management firms can take. Now is the time to integrate Gen AI into your IT landscape to gain a competitive edge. So, let’s dive in.

Leveraging Financial Advisories’ Data Powerhouses

Today, Gen AI is already in common use helping professionals generate quick replies to emails, create summaries from analysis reports, and run quality checks on language-related tasks.

However, in the case of financial advisories, Gen AI’s powerhouse is financial information—safeguarded legacy knowledge banks that have been built over the years, and colossal amounts of big data from real-time financial, market, and customer analytics.

Gen AI breaks down, summarizes, analyzes, recognizes patterns, generates insights, and draws inferences from these data sources to assist in tasks as simple as drafting summaries to sophisticated activities such as building strategies for customer loyalty.

Doing these faster, and at a large scale will shift the role of Gen AI from personal assistant to data powerhouse that is a linchpin for your wealth management firm. Let’s explore.

Critical Areas of Focus for CIOs

To effectively navigate the evolving landscape of wealth management, CIOs must concentrate on four pivotal areas:

  1. Improve profit margins by optimizing operations
  2. Increase revenue by innovating with products and services
  3. Enhance go-to-market strategies
  4. Improve experiences to boost customer loyalty

Improve Profit Margins by Optimizing Operations

McKinsey revealed that in the first three quarters of 2022, client assets sharply declined by 16 percent, and net flows moderated from 2021 highs. But revenue growth for the industry was 4 percent, and margins have improved by 0.4 percent, driven by sustained interest rate increases throughout 2022.

A sharp increase in short-term interest rates has affected the number of assets under management (AUM) by wealth management firms. The resultant decline in AUM has led to a decrease in revenue. In such unpredictable scenarios where unforeseen events drive market volatility, CIOs can still take proactive measures to optimize operations and improve profit margins.

Gen AI helps fortify operational capabilities and sustain and grow margins, allowing wealth management firms to modernize their operations and change their outlook on efficiency. Here’s where Gen AI comes in:

  • Gen AI Office Assistant:Doubling as a personal assistant for back-office operations, Gen AI can undertake mundane tasks of summarizing call transcripts, creating actionable items, and generating documents to support seamless communication with stakeholders.
  • Improve Information Search: Through integration with document repositories, Gen AI can improve information search capabilities, enabling swift and responsive interactions with clients, partners, and stakeholders.
  • Summarize Regulatory and Taxation Updates: Gen AI can summarize regulatory and taxation updates, ensuring wealth managers stay informed.
  • Chatbots for Contact Centers: Gen AI-powered chatbots go beyond conventional responses, generating human-like, personalized replies, enabling executives to address clients’ queries effectively.
  • Optimize Your Day: Gen AI can optimize financial advisors’ daily schedules, using rules to streamline activities, meetings, and action items. Self-trained with historical data and the advisor’s preferences, it ensures an effective schedule.

Increase Revenue by Innovating With Products And Services:

Gen AI summarizes dynamic client communications to help highlight customer preferences and behaviors. A comprehensive understanding of client feedback, market analysis, and client goals helps advisories to make informed decisions for product and service innovations.

Here’s how Gen AI can be leveraged for innovation:

  • Market Prediction and Insights: Accelerate analysis of news, market reports, and analyst reports to identify emerging market trends and potential opportunities for new products and services.
  • Analyzing Customer Transcripts: Deep analysis of client behavior and communication patterns to generate deep insights into customer expectations.
  • What-if Analysis: Gen AI-powered What-if analysis based on market/personal events draws dependable assumptions from news, analyst reports, and prior history of similar customers.

Enhance Go-to-Market Strategies

Gen AI can play a pivotal role in reshaping go-to-market strategies. Advisories leverage this capability to create highly personalized marketing and sales campaigns, reshaping the approach towards potential clients. Gen AI accelerates go-to-market processes by:

  • Developing Go-to-Market Strategies: Gen AI generates product/market segment-specific marketing campaign strategies and a roadmap for tangible results.
  • Market and Competition Analysis: Gen AI helps analyze market segments such as Mass Affluent, High-Net-Worth Individuals (HNI), Ultra-HNI, and Family Office for specific geographies, products, and services. It can also analyze the competition for the same criteria.
  • Personalized Campaigns: Gen AI helps create emails, call scripts, and more tailored to unique customer needs derived from organizational data and business taxonomies.

Improve Experiences to Boost Customer Loyalty

Excelling in customer experience is a continuous endeavor to foster loyalty and retention, ensuring customers stay engaged and satisfied. Gen AI enhances the customer experience with:

  • What-If Analysis: FAs and RIAs can access on-demand What-if analysis in response to a specific event for detailed answers to customer queries.
  • Periodic Market Event Summary: Generate event summaries of impact on asset types based on news and analyst reports on market events. Help customers with insights on the short-term and long-term effects on their portfolio and goals.
  • Periodic Performance Report Commentary: Generate commentary on performance reports for clients’ portfolios.
  • Chatbots: Gen AI chatbots integrated with document repositories help speed up answers to customer queries.

The Future of Wealth Management: Unearthing Deep Insights at Unparalleled Speed

Gen AI is poised to become a pivotal force in the evolving wealth management landscape, offering transformative opportunities for the industry. Through quick integrations and building towards the culture shift to embrace Gen AI, wealth management firms can optimize operations, drive innovation, enhance customer experiences, and improve profit margins considerably.

Firms that embrace these capabilities will maintain their competitive edge.

About the Author

Lakshya Saluja

Lakshya Saluja

Lakshya Saluja is an enthusiastic newcomer to the world of finance. Currently employed with Hexaware Technologies in the Financial Services domain, Lakshya holds a post-graduate diploma in Finance with a specialization in Capital Markets. During his academic journey, Lakshya interned with the Finance team at Miles Education Bangalore, actively involved in identifying discrepancies in existing purchase and consumption patterns and contributing to the development of an MIS report for profit and loss analysis. Prior to pursuing post-graduation, Lakshya gained valuable experience as a Software Tester at Sensiple Software Solutions, where the role encompassed managing the end-to-end flow of bug detection and reporting in bug management tools.

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