Award-winning advisor outlines obstacles on industry's long-term journey to realize tech's potential
Since its introduction late last year, ChatGPT has reignited conversations around the disruptive potential of AI for professionals and firms across every industry, including the wealth space. But as one wealth professional points out, those benefits won’t come free, and some stakeholders will be in a better position to take advantage.
“The adoption of AI is likely to require a specialized set of talent and skill,” says Steve Willems, wealth advisor with the Willems Wealth Planning Group at Assante Financial Management Ltd. “I think from a recruitment perspective, the people that have figured out how to use these tools to their benefit will have a massive leg up over their peers who haven’t.”
AI requires massive amounts of data to operate optimally, which means data quality will be a massive challenge. That helps explain the current limitations of ChatGPT; while it’s capable of responding to queries with answers that include footnotes and citations, Willems has found some lead to non-existent webpages, which may either be obsolete or possibly a total fabrication by the software’s black box.
“You have to understand that just because it's coming through with this magical output, that does not mean that it's been verified, validated, or peer-reviewed,” he says.
At an enterprise level, Willems says the adoption of AI will require seismic changes to existing business models and processes, which means firms should expect some degree of resistance to any AI implementation. Because it will involve sensitive client information, the increased use of AI broadly within financial services will also require stricter measures of data privacy and security to address risks from unauthorized use and cyber threats.
“As firms look to adopt AI at an enterprise level, you’re going to want to still have a sense that they’re in control of the data,” he says.
As part of its ongoing intelligence to support technology in the wealth space, Deloitte says wealth firms need to pay attention and make investments in both technology and talent. One common practice to deflect cyber risks, it says, is to adopt cloud-based delivery models for greater consistency of controls. Some wealth firms and financial institutions are already on the cutting edge with biometric solutions to provide an extra layer of security and a customized experience for clients.
At the end of the day, Willems doesn’t see those challenges as roadblocks, but as speed bumps on the wealth industry’s longer journey of tech adoption. Looking further out into the future, Willems imagines a hub-and-spoke AI technology model for firms, featuring an AI language-learning model being hooked up to plugins that have access to client data. With exclusive access to the enterprise’s data lake, the language learning model would have the ability to accept queries and generate rich, contextualized answers for authorized users.
“In the future, perhaps you as an advisor could query the software to identify all clients who have not yet topped up their TFSAs, and it could generate that list,” he says. “You could give it conversationally driven commands to process private pools of data and have it do an analysis of the data. Then it could perform certain tasks based off of that.”
That’s only the beginning. Across the broader domain of financial planning, Willems envisions a role for AI to assist with behavioural insights for more tailored financial advice, analyses on clients’ assets and investments for tax-planning purposes, and generating strategic planning options and recommendations based on clients’ identified goals and objectives.
“Ultimately, AI will probably solve fewer problems than what we’re thinking of right know; it won’t solve everything under the sun. And it probably won’t disrupt things as violently as perhaps some might say it will,” he says. “The reality will probably land somewhere in the middle. But it’s going to be significant.”
