Digital Transformation: AI’s Sudden Growth in Wealth Management

We’re barely two years since ChatGPT was released to the public and there are already several AI tools for wealth management in the market quickly gaining traction, with more being announced every day and some attracting millions of dollars in funding.

What these developments should inform our industry is that “digital transformation” as a phenomenon comprises different aspects – be it a new technology, a more streamlined way of working, a new client demand – but regardless, once adoption begins, it spreads fast.

The question for advisory firms is, can you keep pace?

The answer is not only yes, you can – it is also a lot simpler than you think. What helps is focusing on quick wins to build up a digital foundation that lets you run your business more efficiently, deliver consistent levels of client service, and help you grow faster too.

KEEPING PACE WITH THE PACE OF CHANGE

Ask yourself – when was the last time you shopped at a mall, or bought something from a department store? How did you book your last trip? Do you still go into town to pay a municipal bill? How often do you schedule an in-person appointment with your doctor?

These are all things we regularly do, but have been forever changed by digital transformation.

I want to assure you that AI isn’t going to replace advisors any more than robo-advisors did. What will eat advisor jobs though is the reluctance of firms to embrace the CANI principle (Constant And Neverending Improvement) because without that, they will certainly fall behind those firms that do embrace technology-enhanced practices through digital transformation.

And just as important as having the will to change is having the platform for change – and for RIAs and IBDs, that’s a digital platform to run your entire business on.

EMBRACING DIGITAL TRANSFORMATION

There are multiple benefits for your firm to embrace digital transformation beyond just staving off disruptive competition. Let’s say you’ve swapped out a paper-heavy process with a digital-first automated approach, such as an online onboarding process. Instead of hours of paperwork and needing to come in person for signing ceremonies, your prospects can open up and fund an account within minutes.

That’s not only a tremendous amount of time saved for your business. Your advisors, administrative employees and those new clients are all happier because they had a convenient, simple experience instead of slogging through a dated process. Your operations team has less headaches to contend with too because the process was all centered in one place and integrated with the custodian, so all the information was sent according to their set standards and virtually error-free. And as the firm principal you are happier because your firm can serve more clients as a result.

Ultimately, you’re solving problems for multiple people by adopting digital transformation – maybe even before they realized they had an issue in the first place.

AI’S SUPERCHARGE PUSHED BY CLIENT DEMAND

AI is undoubtedly going to supercharge many of the practice management tools firms are using today. Prospects and clients pushed even the stodgiest firms to make virtual sessions standard even after the pandemic came to an end. Soon, those same prospects and clients are going to have their own AI-powered assistants to handle their financial lives, including joining up with an advisor and monitoring their progress toward financial goals, and they’ll expect your firm to be able to interact with those assistants. Without a modern technology foundation, your firm will not be able to win that client.

THREE QUICK WINS FOR ADVISORY FIRMS

So if you’re wondering how to get that foundation in place, let me suggest some quick wins your firm can start to achieve right now:

1. Automate Your Onboarding Process:
   One of the biggest time drains for advisors is the client onboarding process. By implementing automation tools that gather client information, send automated reminders, and streamline account setup, you can drastically reduce time spent on manual tasks. This gives advisors more time to focus on relationship-building rather than paperwork.
2. Use AI to Enhance Client Communication:
   AI-driven tools can help advisors stay ahead by automating routine client communications, such as portfolio updates or reminders for important financial dates. Personalized AI-generated insights can also provide clients with tailored financial advice, improving both engagement and client satisfaction with minimal effort.
3. Streamline Task Management with Workflow Automation:
   Advisors often juggle many moving parts, from compliance paperwork to client check-ins. Workflow automation platforms can help by setting up automatic task reminders, managing deadlines, and triggering follow-up actions without the need for manual intervention. This allows your team to focus on higher-value work while reducing errors and oversight.

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