Four Business Benefits of Generative AI in Wealth Management

Discover how this innovative technology can enhance investment strategies, automate financial processes, personalize client experiences, and improve risk management.
Nathan StevensonJuly 5, 202315 min

The potential risks and rewards of GPTs (Generative Pre-trained Transformers) such as OpenAI’s GPT-4 in financial services have been much debated. Yet regardless of opinion, one point is indisputable: GPTs are here to stay.
As such, one of the biggest risks to wealth managers regarding GPTs is ignoring them and failing to explore the opportunities they can bring. Wealth managers, such as Morgan Stanley, which have embraced GPTs are transforming their business and stand to open up an increasingly large competitive gap on the rest of the market. Of course, it is natural to have concerns about how to apply GPTs effectively and safely in a regulated industry. And to use them successfully, it is essential to have a strong associated risk framework aregarding GPTs is ignoring them and failing to explore the opportunities nd human oversight in place.
However, wealth managers should be wary of falling into the trap of sitting on the side lines to see how the use of the technology pans out. The pace of change is more rapid than ever and those companies that are finding ways to work with the GPTs are benefiting from substantial financial, productivity, customer, and compliance gains.
Financial benefits
The first key benefit of embracing AI-technology, such as GPTs, is that it can improve the financial performance of the company. McKinsey’s report The State of AI in 2022 reviews developments in the use of AI technologies over the last five years. It finds that amongst all companies using AI across their operations, 63% report that revenues have increased and 32% report that costs have decreased.
The same report also identifies a group of companies dubbed “AI high performers”, defined as companies making 20% of their earnings before interest and taxes (EBIT) from AI use. Typically, these companies have taken the long view and adopted a learning approach to AI. They have steadily built up their use of AI over time, taking onboard lessons from past successes and failures. Among other best practices, they are more likely to take a full lifecycle approach to developing and deploying AI models, integrate AI models into business processes, and create teams for data science and AI development.
Notably, McKinsey finds that the proportion of companies falling into the high performer category has held steady at around 8%, but it also finds that this group of high performers is pulling away from the competition at an ever-increasing rate. Though the study refers to broader application of AI than solely GPTs, there is a clear take-away that those organisations that take a long-term view and are prepared to invest and explore the different uses cases for the technology stand to make significant financial gains.
Productivity benefits
Alongside the financial benefits, GPTs can also significantly enhance productivity by automating routine tasks, enabling wealth managers to focus on higher-value activities. For example, financial advisors don’t need to spend hours trawling through databases and reports to support clients but can use GPTs to unearth relevant insights. This not only helps boost efficiency, but also serves to increase wealth managers’ job satisfaction, which is particularly welcome for many wealth management firms given that labour markets remain tight in the wake of the pandemic.
A good example of this trend at play is provided by a 2022 Github survey of developers using its Copilot tool, an AI tool that uses OpenAI’s Codex to turn natural language into code. 88% of Copilot users agreed they were more productive using Copilot, with 96% stating they were faster with repetitive tasks. 74% also agreed they were able to focus on more satisfying work and 60% said they were more fulfilled with their jobs.
Customer benefits
In helping financial advisors in their work, GPTs also ultimately benefit the end client. For example, advisors benefit from more accurate data analysis at scale; in turn the client receives improved investment strategies backed by personalised advice. Financial advisors are also aided in their written communication with clients, which helps client decision-making. In addition, GPTs facilitate continuous learning and skill development for financial advisors, helping them stay updated on industry trends, and investment opportunities, thus ensuring clients get the very best service.
Compliance benefits
Finally, in an industry where regulatory compliance is crucial, GPTs can help wealth managers navigate the complex landscape of financial regulations. Together with decision intelligence platforms for detecting and monitoring compliance issues, GPTs can be used to provide financial advisors with guidance on regulation, for instance, by providing answers to questions on regulations or by helping advisors to determine the next best course of action when compliance issues are flagged. Humans are often the weak point in any compliance regime, and by taking this combined approach, wealth management firms can be more confident their employees are meeting compliance obligations.
To conclude, GPTs are here to say. Learning to work with them is essential and can bring numerous business benefits in terms of financial performance, compliance, and productivity. To access these benefits, wealth managers need to take a long-term approach; rather than look to AI and GPTs as quick fix, they need to be prepared to explore, experiment and test. Those that achieve this stand to effect significant business transformation, while those wealth managers that wait too long will inevitably fall further behind the competition. Ultimately, the question that wealth management firms need to ask themselves, is not ‘what are the risks of GPTs?’ but rather ‘what do we risk by not using them?’

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Nathan Stevenson , CEO and Founder, ForwardLane

Prior to launching ForwardLane in 2015, Nathan worked for a number of years in the financial services and technology sectors, including roles at BNP Paribas, asset manager CQS, and the Johannesburg Stock Exchange. Nathan is passionate about AI and since founding ForwardLane has been a noted commentator on its application in financial services, spoken as a thought leader on the subject at Yale and MIT Sloan and also contributed to research initiatives with Oxford Saïd Business School, Cambridge University and the World Economic Forum.

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Nathan Stevenson

Prior to launching ForwardLane in 2015, Nathan worked for a number of years in the financial services and technology sectors, including roles at BNP Paribas, asset manager CQS, and the Johannesburg Stock Exchange. Nathan is passionate about AI and since founding ForwardLane has been a noted commentator on its application in financial services

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