AI in wealth management: A win-win for clients and advisors

Next-generation technologies unlock capabilities for improved prospecting, client personalization, and more

AI in wealth management: A win-win for clients and advisors

This article was provided by Broadridge Financial Solutions.

In an industry that is historically characterized by legacy technology, wealth management firms in Canada and around the world now have access to a growing array of sophisticated technology solutions that harness the power of data analytics, artificial intelligence (AI) and machine learning (ML). As investors increasingly demand a high-touch, digital-first experience amid unprecedented market volatility, these technology capabilities are opening up new growth opportunities for wealth managers enabling them to provide advice and content at the right time via the right channels. 

Leveraging next-gen technologies to find the perfect pairing

The benefits of these new technologies kick in for investors and advisors alike even before a client becomes a client. Wealth managers can use data analytics and other technologies to gain insights into the habits and preferences of prospective clients in order to ensure that they are paired with clients are most closely aligned with their approach and values. Armed with data, wealth managers can identify their highest-potential targets, improve conversion rates and grow their portfolios faster. They can achieve all this while also enhancing the client experience by making sure investors are matched with the most appropriate and compatible advisors. Wealth managers achieve best results when they focus attention and resources on investors In the same way, clients are most satisfied with wealth management relationships when they are paired with the right advisor.

With today’s technology, advisors can segment investors with ease and deliver “mass-customized” sales and service approaches tailored to different groups. For example, in a recent research engagement, Broadridge and Bridgeable synthesized data on investors’ behavioural and psychographic tendencies, evaluating key characteristics like preferred portfolio management style (advisor-guided or DIY), personal communication values and preferences, and information-seeking style (high touch or low touch).

Based on the results, the firms identified four overarching archetypes of investors: Self-Sufficient Researchers, Support Seekers, Habit Keepers and Busy Collaborators. Investors in each archetype share a unique set of traits that reveal bespoke preferences when it comes to portfolio management and how much information they want from their advisors and how often. With technology tools such as AI and machine learning, advisors can better understand how their clients fall into these four archetypes and tailor their communication and correspondence accordingly; ultimately lead to more personalized experiences and financial advice, creating a bespoke financial planning experience.

AI and machine learning to grow existing client portfolios

According to a recent study by Broadridge, about half of wealth managers who have made significant investments in AI have already increased revenues as a result. As such, Data, AI and ML are presenting even bigger possibilities with existing clients by allowing wealth managers to “hyper-personalize” their service strategies.

AI and ML applications have the ability to “learn” about clients by analyzing data like past transactions and product use, and by monitoring clients’ digital footprints—tracking where and when clients click, what they watch and how much time they spend on any individual piece or type of content. These solutions reveal clients’ interests, likes and dislikes, providing advisors with invaluable insights about how best to serve individual clients.

This deep pool of data can be used to feed predictive analytic solutions that anticipate client needs and make suggestions about how best to meet them. Because the AI and ML technology is constantly “learning” more about the clients, these suggestions get better over time. For example, some AI solutions available today have proven accurate enough to predict account closures and large asset withdrawals. Some applications can flag an at-risk account as far as 90 days in advance, and automatically suggest steps the advisor can take to address the client’s specific needs and retain the account.

The hyper-personalized strategies emerging from these technologies are designed to deliver the optimal product, content and advice, at precisely the right time through exactly the right channel. Whether clients are saving to buy a house, putting kids through university, preparing to retire or contemplating some other major life change, they will receive information and investment recommendations related directly to their goals. That customized information and advice can be presented through engaging formats featuring video and interactive features that highlight content most important to the reader and allow clients to drill down for more detailed information. And it’s all delivered through whichever channel works best for the client—paper or digital, online, mobile or in person.

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Personalization in a volatile market environment

Eventually, every part of the client experience will be hyper-personalized—including conversations with the human advisor. Because each interaction between the advisor and client will now be informed by insights and recommendations derived from data on the client’s needs and behaviours, client/advisor exchanges will become more beneficial for both parties. 

In fact, that statement can apply to wealth management relationships overall. AI, machine learning and other technologies are making advisors better at servicing clients and helping them meet their goals, which is increasingly important today as clients seek advice to weather continued economic and market volatility. Over time, that improvement will increase client satisfaction, which will in turn boost client retention rates for advisors and unlock new opportunities to grow portfolio assets. The end result will be a new model of high-tech/high-touch wealth management relationships that are more rewarding and valuable to clients and advisors alike.

Martha Moen is the General Manager for Investor Communication Solutions in Canada at Broadridge.