When will investors completely trust AI to advise them on complex portfolio issues? It’s a question that stares into an uncertain future for advisors.
Chris Turchansky, president and head of ATB Wealth, said the issue of trust remains the main barrier to such a full-scale scenario and is confident that the human relationship between an advisor and client will never go away.
However, he and colleagues at ATB are working on how far along the advice spectrum AI will occupy – and what the crossover point is - given the common use of Robotic Process Automation, which the Alberta firm has already deployed in its back office.
ATB Financial is the largest Alberta-based financial institution, with assets of $54.9 billion and a team of 5,500 assisting more than 760,000 customers in 247 communities in the province.
In 2016, the company leveraged Blue Prism’s connected-RPA technology to address back office efficiency issues, like changing a client’s address. It is currently working on ensuring its advisors have relevant information at their fingertips even quicker, so they can provide better advice on the markets based on, for example, how many times the client has checked their portfolio.
Turchansky said: “Advisors will have access to more information than they can ever use. What becomes critical is how you give [the client] the most useful information. Right now, for example, an advisor will talk to clients about turbulence in the market, often not by which clients are struggling the most to deal with it, but by which clients are the most valuable.
“What AI is able to do based on algorithms and bringing in information, structured and unstructured data, is it will allow you to target clients from a behavioural point of view, which we really can’t do today.
“It will also allow you to create better and more effective conversations with your clients, which we believe will lead to clients being successful on their investment journey. That’s challenging for advisors to do right now with how much information is thrown at them on a daily basis.”
At Blue Prism’s conference in Orlando yesterday, the hosts laid out the benefits if its RPA – a term it coined – and how it can help businesses scale and provide better service to clients.
Turchansky believes we are living through phase one of the AI and RPA revolution, where advisors and financial firms leverage the technology to eliminate dull and time-consuming tasks, creating efficiencies that allow “more meaningful conversations” with clients.
The second phase, which he believes is five-to-10 years out, is the unknown. He explained: “Whether there is a readiness from a technology perspective or a readiness from an investor standpoint, that is the challenge. But at some point down the road, the technology and the capability will be there to answer more and more sophisticated questions that right now an advisor handles.
“The future we are uncertain on is at what point can a client phone in to AI and AI start to do things like create a financial plan for a client? At what point can AI answer questions of not just what my balance is but what are the things I should be aware of that’s going on [in the market]?
“That’s next level. At what point around that advice spectrum can AI start to play a role? That’s a question we are actively engaged with as senior leaders – trying to determine what that looks like.”
Trust is at the centre of this and, right now, the industry has reached a stage where many clients feel comfortable with the hybrid model. Some investors have embraced the full robo advisor model where AI and RPA is already churning out portfolio advice with minimal human involvement.
At the advisory practice level, Turchansky accepts that wealth management is not an area that will naturally feel comfortable with more AI because of the emotional aspect of money. But he warned that any advisor who is not prepared for the AI-RPA era will likely end up sliding into irrelevance and leaving the profession over the next decade.
He said: “Advisors today are better positioned for the amount of change they have to deal with from a tech standpoint than ever before but probably not equipped for the pace of change.
“Advisors that embrace AI and embrace technology are going to provide better advice to more clients in a more efficient fashion, which becomes very hard to compete against if you have decided not to embrace it.
“The advisors who embrace technology are the ones who are going to separate themselves and those who are unwilling to leverage it in their practice, we’ll slowly see them move away from the industry.”