As opposed to being just an extra hand in managing wealth, technology has directly shaped wealth management as an industry. The development and deployment of new AI tools means a change in approach, with reporting made more bespoke, insights sharpened, efficiency improved, and accountability strengthened on a day-to-day basis for a wealth manager.
Adoption of AI is easy enough to say, but responsible implementation is another question — one that wealth management firms must address to ensure the decisions they take on their AI strategy are aligned with their clients’ requirements, complies with regulatory requirements, and can continue to adapt to provide support to their client-facing advisers.
The AI platform
Careful implementation of AI can be accompanied by significant functional benefits, but while it can be an effective and reliable platform from which to provide wealth management services, there must always be strategic leadership at board level to ensure sufficient oversight of how AI is adopted into the business.
There’s a ream of benefits to having an AI tool at your disposal. With appropriate controls to guard against errors, AI can be used to analyse risk, as well as support with monitoring portfolio performance and investment allocation. Efficiency gains are also a major contributor to the overall attractiveness of AI as the automation of time-consuming administration tasks such as reporting, reconciliation, and record-keeping lends managers more time to tend to client relationships.
AI can optimise the reporting process to clients as well, increasing transparency and accountability to create clearer reporting lines and improving the decision-making process using structured, data-led insights.
Portfolio stress-testing, scenario planning and valuation analysis are all critical ingredients to the provision of quality investment advice, and AI can be used to process impressive volumes of data to outline emergent risks and opportunities across markets and client portfolios.
These advances in AI allow wealth managers to focus their attention on client service and ultimately create an enhanced client experience.
Despite these benefits, AI is not a replacement for human judgment. It should be seen as a tool to transform time spent searching for information into time spent interpreting it, and to enhance financial planning.
Challenges in adoption
For wealth managers, integrating AI is not as straightforward as is presented. Without clear guardrails — whether for back-office processes or investment decisions — wealth management firms need to ensure consistent and accountable deployment.
Data quality is another concern. Firms must understand the strengths and limits of their datasets and continually cleanse and organise them to ensure reliable insights.
Changing established processes can be a business challenge, especially when long-term client relationships are involved. Engaging clients and colleagues on what they want from AI solutions will support cultural buy-in and ensure services evolve organically and effectively.
The use of AI in financial services is, of course, also being closely monitored by regulators. Alongside the FCA’s principles for businesses and applicable handbook rules, requirements under UK GDPR apply to AI use and necessitate clear governance and policies over the deployment of tools.
Looking ahead
As younger, tech-native clients grow in influence, expectations of seamless digital solutions will only increase, and given their expectations of seamlessness and familiarity with tech and its uses, dealing with tech-aware clients means being strategic and intentional about how you use AI.
Features once seen as nice-to-have add-ons, such as real-time reporting and personalised insights on investment performance aided by intuitive digital platforms, are becoming baseline expectations.
The bar for wealth management is rising. Principled stewardship and alignment with client values remain essential, but new technologies should enhance, not undermine, those hallmarks.
Wealth managers who actively engage technology as part of their strategy around client engagement will be best placed to maintain client relationships and deliver lasting value.
Simon Ward and Alan Baker are partners at Farrer & Co
