David Kitai 00:00:03
Hello and welcome to WPTV. My name is David Kitai. The rise of generative AI has been greeted as a revolution, and for the first time in a long time, that word is being used appropriately. The capacity to generate text, images and computer code could upend the way so many of our industries operate. It could certainly change the game for wealth management. Kevin Collins is one of the leaders in how financial services can and will use AI. Kevin is the CEO and Founder of Charli AI, which specializes in AI utilization for financial services firms. Kevin joins us from Vancouver to discuss what advisors need to know about the AI revolution. Kevin, welcome to WPTV.
Kevin Collins 00:00:43
Hi, David, thanks for having me. I'm looking forward. It's a pleasure.
David Kitai 00:00:46
Thanks for Thanks for being here. Let's start with a little bit of an overview. I know I gave a brief spiel about your company, but But tell me, what is Charli AI, and what do you do for the financial services industry?
Kevin Collins 00:00:56
Definitely, Charli is actually becoming Charli capital, and the reason for that is that is that we're heavily focused on the capital markets. It's all about investment advisors and supporting their investment strategies, giving them the insights that they need across public and private companies. And this is really where the benefit of AI comes into play. It's those insights that investors are looking for.
David Kitai 00:01:24
No, that's fantastic. So applying those insights means applying them to an industry that is that is in some degree of flux. So in your view, I mean, how do you see Wealth Management changing right now?
Kevin Collins 00:01:35
The industry is in flux for a number of reasons, even if you look at the current economic conditions, the geopolitical conditions investors need to navigate, and if they're armed with the right information, they can navigate those markets much better, even if you look at the Advent that you pointed out, the revolution with AI, everybody's now looking at, how can AI help with our investment strategy? We do see a massive amount of change in the wealth management industry, and that includes the rise of the rise of the private investor. Private investors want more control over their investment and their investment strategies, and that's putting demand on wealth professionals to meet the alternative investment strategies that their clients are looking for. So how do they cope? How do they accommodate even private investors looking to invest in private companies. They want new strategies. They're not just interested in the ETFs or the public companies. They're now looking at different strategies, depending where they are, building up their state looking at retirement, and this means that wealth managers have to adapt, and they're looking at AI as a way to help them with their practice.
David Kitai 00:02:52
That's fascinating. And the idea of privates is such a great example to dig into, because it seems like that application of AI driven insights can really help here. So so maybe talk me through a little bit more of what's specific in the private market and the the nature of information in private markets can be sort of worked through with AI. How can AI be applied to make that sort of information system work a little better for advisors?
Kevin Collins 00:03:17
It's it opens up a world of opportunity, because that private markets been essentially locked away for those that could afford to investigate the market, investigate the companies, who had the army of analysts that could pull the information, analyze the information in order to perform valuations due diligence. You get that in the public markets with analysts that are covering the huge caps, large caps, but the instant you drop into small caps, micro caps, and into private that information is not available. You have to go hunt for it. Yeah, you also have to do a lot of your own effort in order to analyze companies to understand how they compete in the market where their market is going, other fundamentals are doing versus their competitors, and this is where AI now opens up that world of opportunity. In fact, for us at Charli, we have access to information on 75 million companies, and the AI can analyze that literally within minutes, compared to what could take somebody 2346, weeks to complete, especially in the private side, where information is not regular available. You don't have the regulators. You don't have the filings in the US. That's the Edgar filings for 10 Ks, s ones in Canada with the cdar filings, you don't get that luxury in the private sector. So now it's a matter of getting the financials and allowing the AI to really apply the intelligence between analyzing this. And if you think about it. From a private investor. How do you evaluate a financial company versus a tech company versus a construction company is completely different.
David Kitai 00:05:10
No, it is fascinating. And the idea of, you know, the quantity of quants that are required to normally do that, that you can replace with an AI system, is really remarkable. I guess the natural question out of that, though, is, how do you ensure that the data that's being fed to your AI on these private assets? And we can widen this out in a moment, but I'm just, I want to dig deep on the private assets here. How do you ensure that that data is accurate, is safe, is secure? Because there's sort of the sentiment of you, sort of you get out what you put in when it comes to a lot of AI language models. So how are you, how are you sort of ensuring the quality of the data inputs?
Kevin Collins 00:05:51
There's a lot of techniques to ensure the quality that we have taken. So we're even though we're becoming Charli capital and very focused in this industry, our rates are in this tech space of AI, and we've been doing this for over 20 years. So our entire team knows the depths. If you're looking at large language models, which is kind of the hype flavor of the day. They're pre trained general purpose tools. We're not trained in the world of finance. And although they may have the appearance and appear to be confident in their answers. I saw a recent article out of Columbia Journalism Review that indicated that the fail rate on these tools can be anywhere from 40% up to 90% and you cannot have that in the world of finance, let alone your investment strategies. So we don't take that approach of just relying on an LLM for accuracy. We go to trusted data sources, and we spend years making sure we get trusted data. We never rely on a large language model to regurgitate pre train knowledge, because that's one of the other key things we know in the world of finance, day to day changes is happening just from last week to this week is how are the tariffs going to impact I never, ever want to see pre trained knowledge coming up in our AI. I want that AI to be a financial expert, and I want it to surface real time information and real time insights, and that means we can't rely on this pre client knowledge that a lot of these large language models are regurgitated. We also have to invest heavily into what we call fact check analysis. Any information that our AI is spewing out, there has to be another AI that can benchmark and quality check the answers that are coming out. That's part of the design elements. Again, you don't get this in the consumer world. This is really dedicated, high performance, secure, private, trusted information. In the world of finance, there's a lot of techniques that can unravel there, but we would caution a lot of folks do not rely on general purpose tools. You really have to look at finance specific tools.
David Kitai 00:08:11
You've laid out, I think, very clearly, how this would apply in something like private markets, where there's often a dearth of data, where it requires a level of research and an analysis that is usually reserved for experts. What about public markets? So in these areas where you have a lot more available knowledge, where there's a bit of a longer track record of easy access to information, how can an AI tool like yours also help advisors differentiate themselves when they're operating in public?
Kevin Collins 00:08:38
So the public side of it, it's really riding the wave of some of the volatility in the market, understanding when to buy when to sell, like a whole our AI will look at what the analysts are saying, but it will make its own judgment pulse. So a good example of that, it's looking at whether companies are overvalued or undervalued. It's closely looking at return on equity. It's looking at leverage ratios. If you're in the financial sector and you're a bank, and it's looking at that on a real time basis, whereas if you're just watching those markets and relying on analyst feedback, your information can be a month old. It could be six weeks old. We've seen that on a lot of cases and AI, and now allows you more real time visibility into the market, so you can adjust your investment strategy and a near real time basis. The other elements is looking at long term what if scenarios, which you said that it's the army of watts. That's just impossible for a lot of organizations to execute in a near real time basis. So AI is giving you the ability to run a lot of what if scenarios, I guess a lot of different companies, even in the public sector. We love the public sector, from the fact of going into regulatory five. Links, because we know that a lot of hidden gems are in the disclosures, but surfacing that means an analyst has to read a 300 page document, which we all know is not something we look forward to throughout the day, the AI can actually surface those hidden gems in cell line. So that's the benefit, even on the public side, that the AI can provide.
David Kitai 00:10:25
Yeah, so how I guess, does this fit into the work an advisor doesn't? And what I mean by that question is advisors are now being asked to do a lot more than just generate alpha or find opportunities on the market. There are so many pieces within the sort of holistic wealth management, sort of job descriptor that are pulling on advisors tonic. So how does the advantages that you might be able to give them in terms of this quantitative data? How do those advantages fit into their wider work?
Kevin Collins 00:10:56
AI gives you the time back in the day, if you think about it from an advisor perspective, they want to spend time with their clients. They want to understand their clients, investment strategies, their long term goals. Are they looking at retirements? Are they looking at income generation, or are they looking at various returns? And expanding their client base means more work, especially if you're looking at compliance requirements. Now, even in Canada, you've got the Kyp, you've got a do then know your product. So if you're selling something to a potential client, you have to know what you're selling. And that's onerous for a lot of the advisors that are out there, and this is why they have to now trim down their business in order to meet compliance requirements or to meet the demands with the clients, whereas AI now gives them the capacity, gives them time back, spend more time with your clients, spend time understanding their needs. Help your analysts rely on some of the analysis and number I call it number crunching. Analysts shouldn't be doing number crunching now, analysts should be relying on the AI to do the number crunching, so that the analysts can be more critical thinkers. Here's the strategy I think will work for the client, and what it can do is increase capacity, so now the advisors can take on more clients. They can also tailor each of the client's portfolios to their very specific needs and not have to fret about knowing what the client needs and meeting the Kyp compliance requirements. There's a massive benefit to adopting the right AI for their practice.
David Kitai 00:12:38
Yeah, the KYP piece is always so fascinating, because I've heard other advisors and industry leaders kind of talk about how KYP has actually served to narrow the product shelf for a lot of advisors, because there's only so much you can know about each product. But having access to this information, I guess the way to frame it as a question is, is it fair to say that having that better access to information and just the speed of data delivery that AI can can provide allows you to meet those regs without necessarily having to trim the product shelf to the to the extreme degree that that some advisors have been forced to.
Kevin Collins 00:13:14
Oh, 100% I mean, if you think About your cognitive capacity to understand all of this, it's difficult, especially when you're really trying to closely work with your clients, and you also have to know the ins and outs of every single product that you are selling. That's difficult to do without a lot of analysts behind you feeding you the information. A good example of that is that I crack well over 100 equities. For me personally, within Charli and I track closely the aerospace industry, both public private companies, because I'm very interested in that space. I want to understand how it's going to evolve. Is the market going to shift to Europe. How is SpaceX going to compete with you? Tell us that go through all this right now. And then I also look at the automotive sector. And I can tell you right now I know a lot about Ferrari because I actually have a good friend that's heavily invested into Ferrari, but I can also see the impact of what that's going to mean on for GM compared with Tesla, and I've got those intricate details, but I can easily switch to tell you the private companies in tech sector that I'm tracking, whether that be companies in the Cybersecurity space, or whether that be companies in the product like growth space, I know those details because I'm actually relying on my AI to give me those details on our regular basis and keep me a form because it's automated. That's the other thing. I don't have to go in and prompt engineer on AI anymore. Every morning I wake up, I. Got the AI bucking, me to say, here's top of mind for you.
David Kitai 00:15:04
That's utterly fascinating and just just a great example to see these sort of practical applications. The other piece, though, is, is around security. And I know you talked about, sort of the quality of the data inputs, but the security of the whole chain and the security of the data outputs when we're dealing with, of course, sensitive client sensitive client data advisory firms themselves that have their own internal data protection requirements. How do you ensure that this is all you know? While you're teaching AI models, you are still ensuring that what you're teaching them remains secure.
Kevin Collins 00:15:38
Yeah, and security is my background. Well, a lot of people aren't. I used to be. I always joke I was certifiable at one point because I did focus heavily on security within my career. That was my background. When we started Charli, it was all about the security of the systems, and you hear it right now that AI has got a massive amount of danger, and I firmly believe there's a massive amount of danger out there. You have to protect your information. And what we try to educate our our customers on is that just asking a question of an AI exposes you, and a lot of people don't understand it. So they will go to a chat GBT, they'll go to our complexity at Deep Sea, and they'll continue to what they say, prompt engineer. So prompt engineering is becoming the new fab. Prompt engineering is you giving your intellectual capital to an AI. And I can tell you right now that the AI doesn't care as much about your data as it cares about your Q A, if I know who you are and I know your line of questioning and I know what you're looking at, I have a lot more information at my disposal in order to either beat you as a competitor or to undermine you or to steal information just by the Q and A you're doing, I don't need your data. And that's the other thing we tell people. It's like, everybody thinks, Oh, my data is, you know, your personal data is up and so you needs to be secure. But your data about companies, everybody's got valuable data. So how more valuable is yours to someone else's? But what is valuable is I need to know your strategy. I need to know what you're looking at. Are you looking at construction? Are you looking at raw materials? Are you looking at supply chain? That's a wealth of information. And the instant you give that intellectual capital away to an AI, your competitor is going to get it as well. So if you come back to how we have constructive Charli is that we protect everything for our customers, your Q and A never goes up to the public domain. We will never train our AI on your data, and we will never train your AI on your Q and A because that's too sensitive for you. We also go to great lengths to protect your private information, whether that be PII or GDPR, those regulations are protecting your Social Insurance numbers or social security numbers. They're protecting a lot of personal information about we go to great lens to protect them within our system. None of it will ever go to the public domain. We don't use our perplexity or chat GPT or a Gemini or rock or any of those tools. Everything's 100% contained within a highly secure infrastructure that is audited by us. When we recommend in the world of finance, you do have to look at them. It's highly sensitive definition.
David Kitai 00:18:41
He took me through both worried and reassured in the course of one answer. Kevin, so thank you for that. But yeah, just just, just utterly fascinating. And I guess the sort of the final and natural question is kind of, how can advisors start right? You've shown all the ways they could use an AI process like Charli to kind of gain advantages, earn time, but what are the first steps they can take to begin to integrate AI into the way they work on a day to day basis?
Kevin Collins 00:19:09
I would recommend that the advisors look at how they want to scale their business and how AI can help with their number crunching efforts or their KYP efforts, because those are time consuming, and it does take time away from clients. The real value for the advisor is to work with as many clients as possible to tailor their investment strategies to each of the clients. AI does have that benefit. Now, I would caution anybody heading down the path of a DIY, and this is where I would recommend them looking at partners in order to leverage tools that are out there and that tools that can secure, tools that can give them trustworthy answers and give them access to the data that they need for their clients, I would definitely caution against the. Line, and they would caution against using a general purpose to you do have to look at something a little bit more financially savvy for the practice. And there is tooling out there, and I would incorporate that into a transformational process that the advisor has to do. Now, analysts, we've always found analysts within these organizations are reticent to adopt the new technology because they feel their jobs interpreting so this is where the human factor comes in to transform to say that the AI is doing the number crunching, the analyst is doing the critical banking, and it says to go back to get the tools that can help you do the number crunching and do it fast and feed that information to the analyst so that you can actually scale the business. But I would start to leverage AI today. I would not be waiting. There are tools out there today, and it can help the process along, and the tools are only going to get better over the next few months. This could be quick. It's not going to be slow.
David Kitai 00:21:10
With that. I believe Kevin, that is all the time we have. So I will just say thank you so much for taking the time and speaking to us today, to for laying out such a fascinating and evolving area, I feel like if I check in with you, in about three months time, there will be a significant range of updates to talk about in this evolving space. But just thank you for your insights and for all you've shared with us today.
Kevin Collins 00:21:34
No thanks, David. I appreciate you having me on.
David Kitai 00:21:36
And thank you to all of our viewers for WPTV I've been David Kitai, have a great rest of your day.
