In recent years artificial intelligence has become a dominant topic in both mainstream conversations and global headlines, particularly since OpenAI’s launch of ChatGPT on November 30 2022.
This watershed moment has catalysed widespread awareness and adoption of AI technologies and products.
‘Will AI take our jobs?’ remains one of the most pressing concerns as its influence continues to grow.
The mainstream adoption of AI has sparked geopolitical tensions, particularly between the US and China, over the export of advanced semiconductor chips essential for AI development.
Meanwhile, other global players, including the EU, are actively positioning themselves as major contenders in the AI market, striving for a significant share of the industry.
You might wonder how this technological revolution relates to wealth planning and financial health. The answer lies in unprecedented access to financial data, enabling more informed decision-making and wealth management strategies.
For the financially savvy, AI serves as a valuable tool, a helping hand in navigating complex markets. And for those less financially savvy, AI is nothing short of a game-changer.
Accessible financial guidance
In 2022, only about 8 per cent of UK adults sought financial advice, with professional advisory services typically requiring a minimum of £50,000 in investable assets.
This threshold effectively excludes a significant portion of retail investors, making financial advice inaccessible to many. However, modern AI-powered platforms have made sophisticated financial guidance tools widely accessible, transforming how individuals and families manage their wealth.
From analysing spending patterns, generating budgets, delivering personalised financial insights, categorising transactions, forecasting future expenses and flagging unusual spending, AI-driven tools are redefining money management.
An October 2024 report by Experian found more than half of Gen Zs and millennials polled now depend on AI-powered solutions for personal finance guidance.
Integrating AI into operations
Traditional financial powerhouses, including JPMorgan, Goldman Sachs and Citibank, along with hedge funds and private equity firms, have integrated AI into their operations.
A 2023 EY financial services survey of executives at wealth and asset management firms with more than $2bn (£1.5bn) revenue identified generative AI’s top impacts: alpha generation and financial advice, followed by client onboarding, marketing, and investment operations. This underscores AI’s growing influence in wealth planning.
Other notable impacts of AI technology include boosting productivity, streamlining daily tasks, identifying investment opportunities and enhancing customer service, all contributing to the broader shift towards AI-driven financial management.
AI-powered robo-advisers have transformed wealth management, making investing more accessible and cost-effective. Using machine learning, they analyse data, tailor strategies and optimise portfolios based on individual goals.
Although exposed to market risks, robo-advisers are projected to manage $2.38tn in assets by 2029, according to Statista data. For many investors, they provide a viable alternative and complement to traditional financial advisers.
Opportunities and challenges
AI offers significant opportunities while posing challenges in operational integrity, data security, compliance and risk management. As organisations integrate AI – whether developed in-house or through third-party solutions – regulators must strike a balance between encouraging innovation and ensuring responsible adoption.
AI is already revolutionising wealth protection, with machine learning enabling real-time fraud detection and prevention by identifying suspicious patterns.
To fully harness its potential, global co-ordination on AI standards and harmonised regulations across jurisdictions is crucial. This would streamline implementation, remove barriers and accelerate advancements.
AI enhances, not replaces, human capabilities
While it may reshape industries and job dynamics, AI is unlikely to replace human financial advisers. Instead, AI will enhance their capabilities, enabling more tailored solutions and broader client engagement.
By analysing vast data sets and uncovering insights, AI empowers financial professionals to move beyond traditional, intuition-based frameworks, offering more precise and data-driven guidance.
Game-changer
AI has become a vital tool for retail investors, offering access to advanced financial insights at little or no cost.
Its ability to process and analyse large volumes of data enables individuals to make informed decisions, levelling the playing field and fostering a more inclusive financial ecosystem.
AI is not just a technological advancement but a game-changer for the global financial industry.
Jesufemi Ayoola is head of risk and compliance at Stonehage Fleming in Guernsey
