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As an investment theme, artificial intelligence (AI) captivated market participants in 2023 and it’s just getting started, but there’s much more to AI. That includes AI’s expect impacts on an array of industries, including financial services.
Yes, that includes the financial advisory business. Owing to advancements in generative AI, there’s widespread speculation that this technology will eventually usurp some high-paying white collar jobs. Add that to the increased intersection of technology and investing and it’s not surprising that some registered investment advisors are fretting that computers and robots will eventually steal their jobs.
Don’t worry. Scores of data points and surveys confirm that clients prefer the human touch and don’t want AI or robots replacing their advisors. And for the advisors out there that love securities research and selection and portfolio construction, don’t fret because accessible AI technology isn’t yet nearly advanced enough to pick stocks or build out complete investment portfolios.
Advisors should take the time to examine NVIDIA’s fourth annual State of AI in Financial Services Report, which outlines AI use cases for financial firms, plenty of which are highly pertinent to advisory practices.
Nvidia Survey Is Meaningful
It’s reasonable to be skeptical of Nvidia talking it’s “AI book.” The company is now the fourth-largest in the U.S. based in large part on its dominant perch in the world of AI semiconductors, but its outlook on how AI could affect the financial services industry is worth acknowledging. Some of the argument for better integrating AI into the world of finance boils down to streamlining operations.
“Portfolio optimization, fraud detection and risk management remain top AI use cases, while generative AI is quickly gaining popularity with organizations keen to uncover new efficiencies,” notes the chipmaker.
Advisors, particularly those looking to cater to tech-savvy younger demographics, can take heart in knowing that there’s a strong client engagement improvement case for AI.
“Customer experience and engagement was another sought-out use case, with a 34% response rate. This suggests that financial services institutions are exploring chatbots, virtual assistants and recommendation systems to enhance the customer experience,” adds Nvidia.
More AI Use Cases for Advisors
It’s not a stretch to say that many advisors view “compliance” as a four-letter word and marketing as a necessary evil that’s not one of their original areas of strength. AI can be of assistance on both fronts.
“With 75% of survey respondents considering their organization’s AI capabilities to be industry leading or middle of the pack, financial services organizations are becoming more confident in their ability to build, deploy and extract value from AI implementations,” observes Nvidia.
For advisors that need some more cajoling about AI, consider the following. Forty-three percent of the financial services pros polled by Nvidia “indicated that AI had improved their operational efficiency, while 42% felt it had helped their business build a competitive advantage.”