Disrupting Tradition: How AI Is Reshaping Wealth Management In The UK
We all know that artificial intelligence has become an extremely valuable tool for many different industries across the UK. Over time, the technology is only becoming more efficient, more productive, and crucially, more accessible.
However, one industry is experiencing a particularly noticeable shift towards artificial intelligence - and that’s wealth management.
In many ways, AI is a perfect fit for the wealth management sector. Wealth management involves processing large amounts of data, analysing financial statistics, completing time-consuming processes, and making well-informed recommendations - all tasks that machine learning excels at.
AI can bring a lot to the table for both wealth management experts and clients, including improved efficiency, reduced costs, and superior outcomes.
But while artificial intelligence is incredibly promising, it’s not flawless. Every industry embracing AI technology will need to think carefully about potential issues with data handling, ethical considerations, and government regulation - wealth management is no different.
In this post, we’ll explain how AI is disrupting, reshaping, and enhancing the wealth management industry - and explore what the future may hold for this groundbreaking technology.
Three ways AI is disrupting wealth management in the UK
Artificial intelligence offers a mind-blowing number of applications for wealth management, but we’ll focus on three of the biggest changes the technology is driving right now.
1. Delivering personalised, optimised financial advice
Wealth managers offer a significant amount of value by sharing financial/investment advice with their clients. They’ll often advise customers on investment strategies, savings, tax liability, and estate planning.
AI can be a tremendously useful tool here.
While AI can’t necessarily deliver independent financial advice (yet), it can equip wealth managers with the information they need to offer data-driven recommendations.
For example, AI algorithms can effectively analyse massive amounts of data to create more personalised, tailored solutions. They can absorb both client-specific details (e.g. individual risk profiles, investment goals) and broader insights (e.g. market trends) to optimise investment strategies - and when combined with the experience and expertise of wealth managers, this can lead to far better outcomes for clients.
2. Improving automation, efficiency, and quality
While it may seem obvious that AI can automate and streamline manual tasks, this benefit shouldn’t be overlooked.
Wealth management involves plenty of time-consuming processes, from managing multiple accounts to rebalancing portfolios and completing regulatory paperwork. AI can be a game-changer here, automating these tasks to skyrocket efficiency and free up time.
For wealth managers, this means they can spend less time on monotonous jobs and more time putting their expertise to good use - crafting investment strategies, looking for new market opportunities, and thinking carefully about long-term planning.
For clients, this means that wealth managers will need to spend less time managing their accounts, which could lower fees while also improving outcomes.
3. Fuelling risk analysis & decision-making
Naturally, wealth managers frequently need to balance potential financial gains with risks.
The financial market is constantly fluctuating, and the most successful wealth managers need to know how to make the right decisions at the right times.
However, pursuing profitable opportunities while also mitigating risk is obviously very difficult, and requires a staggering amount of data collection/analysis. Once again, this is where artificial intelligence can shine.
AI can rapidly provide insights into emerging market trends, portfolio performance, and potential risks. Instead of spending hours handling data, wealth managers can lean on AI to produce the crucial insights, and then use this information to make more informed decisions.
Challenges and ethical considerations for AI in wealth management
There’s no doubt that AI is proving to be a transformative tool for the wealth management industry. From improving time efficiency to delivering profitable insights, artificial intelligence can benefit both wealth managers and clients in many ways.
However, as with any emerging technology, there are a few potential roadblocks and important challenges to consider.
For one thing, data privacy is a major concern for wealth managers, since client financial information is extremely sensitive. Can AI platforms be trusted to protect this data, and would clients be comfortable with their personal information being used to train AI models?
Another issue is the accuracy and reliability of AI outputs.
AI can only learn from existing information and models, and since humans are inherently inaccurate at times, this means AI is also fallible. More concerningly, humans also suffer from unconscious (and conscious) biases, which could quickly filter into AI decision-making.
Finally, while government regulations are still catching up to rapidly evolving AI technologies, these could eventually throw a serious spanner in the works. If wealth managers become too reliant on artificial intelligence, any regulations limiting the use of AI could be disastrous.
What does the future hold for AI in wealth management?
The future of AI in wealth management is as exciting as it is unpredictable.
Artificial intelligence is very much an evolving technology, and there are plenty of tools (e.g. blockchain, quantum computing, procedural generation) with a colossal amount of untapped potential.
In the short term, we can say with confidence that AI is helping both wealth managers and clients to maximise efficiency and improve outcomes.
As for the future, a huge amount depends on technological development, AI accessibility, and government regulation. It’s not a question of if AI will impact the wealth management industry - it’s really a question of how much.
We’re excited to see how wealth managers will embrace and leverage artificial intelligence in the coming years, and how this technology will benefit clients, businesses, and financial institutions!
If you’re looking for guidance on finding the best talent for a growing finance team within Fintech, please get in touch with [email protected]
