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Ian McKenna: The era of AI in advice is upon us

This week I am in New York to see the latest innovations in wealth technology  and to hear from several industry leaders transforming the way Americans access advice. Now in its third year, the In|Vest conference provides a heady mix of powerful tech demonstrations and exceptional thought leadership.

The big message on day one was how machine learning and artificial intelligence is now part of the emerging landscape.

The day began with a whirlwind of demos of disruptive technologies. The videos of these will be up on the In|Vest website in a few weeks but in the meantime here are my highlights.

First up was Salesforce with their Financial Services Cloud, which provides great visualisation of relationships, interactions and delivering insight. It is clear from the number of integrations Financial Services has in US that the American proposition is a long way ahead of their UK offering but this does give an indication of where Salesforce may be in the UK in a couple of years time.

While the system can offer some great integration of consumer data I wonder how much of this would be allowed in Europe post the introduction of General Data Protection Regulation next May. This makes me wonder if the European Union and fintech are on a collision course, as I am increasingly worried the excesses of GDPR and the EU’s inability to produce timely regulation could could seriously damage the EU fintech industry.

Robert Stanich of IBM Watson showed how machine learning can identify clients at risk of leaving, and how using artificial intelligence can transform client segmentation beyond recognition. The service can also predict real life events and related product opportunities before clients realise they have these needs. Watson has the potential to transform lead management so that existing data becomes the primary source of new business opportunities.

Advicent showed great life protection tools they have built which makes me wonder why the omnichannel protection service they built for Scottish Widows never saw the light of day. An opportunity missed.

MX then arrived to show why they do aggregation, categorisation and user interfaces for personal financial management better than anyone else in the world. They do not want to come to the UK as they have so much business in the states, but that is a great shame.

Fidelity-owned eMoneyAdvisor showed marketing tools that would help advisers transform the way they use and manage social media and then onboard the resulting new clients. I continue to believe there would be huge benefits in Fidelity bringing their offerings to the UK.

InvestCloud showed some of the over 200 apps their adviser clients can use. I love the vast amount of data they are making easily available to their users and the virtually endless look, feel and design features advisers can adapt.

They are featured in the next update of F&TRC’s Adviser Software Insights study and have just set up an innovation centre in London so I will probably be looking at them in far more detail soon.

One of the biggest moments of the day for me was Hello Wallet founder Matt Fellowes, the man behind the United Income business which aims to transform retirement income. The service makes it simple to understand how clients are doing then build and achieve financial life goals. It is great to see United Income building financial plans that take consumers to 100 years plus, stretching savings to match increased longevity.

United Capital ‘s Joe Duran outlined why advice firms need to be both extremely human and extremely digital, but insisted the planning process can be fully digitised. He argued humans need to do to things machines cannot, that is, provide empathy, understand human behavior and provide expertise and judgement to help with complex decisions.

Charles Schwab chief technology officer Timothy Heier pointed out we are no longer in a mobile first phase, now it must be a case of artificial intelligence first. This shows the era of AI in advice is now upon us.

Bill Crager of Envestnet, which owns Yodlee, argued a key component of building advice relationships with clients in the future is about giving consumers an integrated financial plan updated every day. This will provide a very gameified experience and I can see how it would have a similar effect to social media – we all want our regular fix of information and cannot resist looking at social media regularly.

Crager sees artificial intelligence delivering answers to financial questions based on the data the adviser will have aggregated via these services.

These issues are very relevant to the challenges that will emerge as banks re-enter the advice market, which I will be looking at in my next column.

The consistent message was we now need to start complementing traditional advice services with unparalleled data and artificial intelligence to deliver a superior customer experience.

An extended version of this analysis can be found here

Ian McKenna is director of the Finance & Technology Research Centre

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