TECHNOLOGY & OPERATIONS
easier . When we say we created a product around AI , it ’ s a bit of a misnomer because all we ’ ve really done is teach a machine the relationships between words — there ’ s no actual intelligence .”
RiXtrema is using AI to help advisors analyze 401 ( k ) plans and list out the advantages and disadvantages of the plans ’ designs , then it automatically drafts emails to pitch better alternatives to plan sponsors . RiXtrema ’ s applications can also write call-in pitches for advisors and explain compliance rules they may not be able to translate into layman ’ s terms for prospects and clients .
How It ’ s Used
Companies such as Savvy Wealth and Envestnet have found three main uses for generative AI : in marketing , client relationship management and compliance .
“ The first way we saw advisors using generative AI is to create content — or at least create the idea for content ,” says Dani Fava , the group president of product innovation at Envestnet . “ You can go to something like ChatGPT and ask it to act like a financial advisor who has high-net-worth clients who are thinking about summer vacation . It will tell you what it thinks your clients most want to know about summer vacations — like , are they most interested in budgeting or whether or not they should buy a summer home . Then you can turn around and ask ChatGPT to write a 500-word newsletter about the benefits of renting versus buying a summer home , take that edit and send it to customers .”
Generative AI can also be used to create blog posts , imagery and other content . According to Scott Lamont , head of consulting at RIA wealth tech consultant F2 Strategy , software using generative AI combined with machine learning can both draft emails and pitches to prospective clients and also sift through a large number of potential prospects to find the ones that best match an advisor ’ s most successful clients .
Malhotra says Savvy Wealth has used AI for email responses . “ On working with prospective or existing clients , we ’ ve launched functionality recently where if clients email their advisor , we ’ ve built in an integration in our technology using generative AI to create email draft responses back to the client , given all of the data , all the past actions , and the potential responses ,” Malhotra says . After the AI generates a response , advisors can edit it , putting it in an advisor ’ s voice and further customizing using their personal knowledge and intuition about the clients .
F2 is also exploring the ways AI can be used to sift through market data to create a general assessment , and then align that assessment to clients ’ data such as their
RiXtrema is using AI to help advisors analyze 401 ( k ) plans and list out the advantages and disadvantages of the plans ’ designs , then it automatically drafts emails to pitch better alternatives to plan sponsors .
portfolio holdings , Lamont says . An advisor can then use generative AI to create talking points for the next client call or meeting , all in about five minutes .
Similarly , in compliance applications , generative AI ’ s ability to understand and summarize large amounts of content can help create more efficient processes . “ AI can also be trained to look for patterns of behavior and to identify potential bad actors ,” says Adrian Johnstone , CEO of Practifi , a business management platform for RIAs .
However , he warns that the technology also gives these bad actors more weapons as well .
“ Just as AI can bring the good guys scale to help create better compliance and cybersecurity , it also gives the bad guys scale to exploit vulnerabilities ,” Johnstone says . “ Generative AI could make things like phishing campaigns much more mature and effective . It can be used to power ransomware attacks and those types of things , too .”
RiXtrema is also using AI to monitor email for compliance red flags , says Perullo . And he warns advisors to be careful on bots like ChatGPT , since any information they give it will be absorbed and made publicly available . That means public AI models are not good places for anything involving private or protected information . RiXtrema has built its own model , and thus hopes to enable advisors to deploy AI more directly in their client relationships and the portfolio management experience , taking the client ’ s actual demographic and financial data , in real time .
But AI is not a tool that can “ do it all ” in financial planning and wealth management , warns Johnstone .
“ Generative AI and natural language processing are not well-suited to analyzing huge volumes of numeric information ,” he says . “ A lot of people think when they hear about advice tools and AI that they ’ re going to get these deep market predictions and analyses of huge sets of numerical data , and it ’ s just not designed to do that . It ’ s more about drafting emails and blogs and content creation , and analyzing language-based inputs .”
What ’ s Next Malhotra emphasizes that the wealth management industry is still just figuring out how to deploy generative AI , which he describes as “ Phase 1 .” Phase 2 will come when AI is used to produce something entirely new , something that may currently be well outside of the realm of financial advice or wealth management experiences , that augments or alters the client or advisor experience .
Of course , it ’ s hard to say exactly what that “ Phase 2 ” experience or product might be , but he argues that it could be a more concierge-like experience where
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26 | FINANCIAL ADVISOR MAGAZINE | JULY / AUGUST 2023 WWW . FA-MAG . COM