Leading voices from the wealthtech and financial advisory spaces weigh in
ChatGPT was only launched in December last year, but it has already become the new shorthand for AI’s potential to trigger seismic change across the business world.
For database administrators and code jockeys, it’s a potential godsend as it relieves them from having to do countless menial tasks. It’s also yet another challenge for educators, as ChatGPT creates another battlefront in the war against cheating.
Wealth industry insiders are likewise weighing the disruptive implications of ChatGPT. On balance, will it be a game-changing development that will spur a new age of revolution for financial professionals? Or in the immortal words of Miley Cyrus, will it come in like a wrecking ball?
“ChatGPT will definitely disrupt the wealth space,” says Robert Madej, founder and CEO PureFacts Financial Solutions (pictured above, left). “It’s already had a huge impact.”
PureFacts is one of numerous Canadian organizations pushing the boundaries of AI in wealth tech. In 2019, it bought a company called Electric Brain to jumpstart its AI practice; today, it employs a number of full-time data analysts and PhDs in machine learning and AI.
“At PureFacts we spent the first 11 months of 2022 talking about AI with our clients. In November ChatGPT showed up shining a very bright spotlight on AI, and clients are thinking it’s really here,” Madej says. “Even if it’s not front and centre as far as media coverage, work is going into this space. Research is being done, and there’s no question it will pay off in the long run.”
Today, people are paying attention again. ChatGPT is trending on headlines and social media hashtags, and it was a point of discussion at the World Economic Forum’s annual summit held last week at Davos. Microsoft has also invested US$10-billion in OpenAI, the company behind ChatGPT.
“Even if ChatGPT is not the specific tool that gets wealth management and asset management firms using AI, there's no question that it's got them thinking about AI again in a very positive way. And it’s not the endgame,” Madej says.
“You can think of it as the original Model T before everybody buys a car, or the first light bulb that Edison put on in his lab before lights went all over the world. This is just the beginning.”
For Michael Kitces, prolific author and prominent voice of the financial advice profession (above, right), ChatGPT is the latest in a decades-long line of technological advancements – including computers, the internet, and robo-advisors – that were supposed to render financial advisors redundant. But what doesn’t kill you makes you stronger, as the saying goes, and so it went for the financial advice profession.
“None of those technological leaps replaced financial advisors, even as computing power has grown by 10,000,000 times in the past 50 years,” the founder of Kitces.com told Wealth Professional.
Every new technological development, Kitces says, automates rote tasks that nobody wanted to do in the first place. By whittling down the back-office work and overhead costs of running an advice business, technology has led to faster delivery of effective advice, even as it drove down commissions and fees.
Even as he recognizes the power of technology, Kitces emphasizes that computers are built to take inputs and generate outputs efficiently. While ChatGPT can tell someone how much to save if they wanted to retire at 62, it can’t ask incisive questions, explore what-if scenarios, reassure investors during crashing markets, or navigate the kinds of human conversations advisors have with clients.
“Simply put, if you ask a computer a question, it gives you an answer; it doesn’t challenge you to ask better questions that may lead you down a better path or change your behaviour,” Kitces says. “Computers are fantastic tools that advisors can leverage to get answers themselves – and why technology just keeps making advice more efficient and effective – but they don’t replace the financial advisor.”