AI is changing pretty much everything about our world.

The wealth management industry is no different, and your firm won’t be exempt either.

Given some conversations I’ve had recently, I know a lot of you are a little hesitant to adopt AI and wary of its impact on data security, compliance and essentially every other category of our work.

But it’s 2024, and the reality is that AI is fundamentally reshaping the expectations that clients have with their advisors.

Recently, my family was conducting an estate sale for some of my late father’s items.

The sale was conducted through an online auction portal over the past three weeks. I’ve monitored the progress daily — partly for nostalgia’s sake and also to ensure that things were moving along well.

While it wasn’t the end of the world, sifting through 23 pages of information manually every day was a bit time-consuming and inconvenient.

I then realized that I could write a bot in OpenAI that scans the data nearly instantaneously — automatically.

This allowed me to prompt a data set and ask all sorts of questions based on the information.

Average unit sale price?

Average number of bidders?

Least popular item?

Most popular item?

All of this information is now available to me on demand.

If it’s accessible for me to put together this sort of setup with bespoke items like this, your clients are likely about to start prompting you for data relating to all sorts of scenarios.

This level of access dramatically simplifies life for people, and if the trends continue, it will only get easier and more accessible from here.

What does this do to the value of an advisor or our jobs as advisors?

As the oft-quoted business conference sage, Wayne Gretzky, once said, “We have to skate to where the puck is going.”

The control over your data is your skates and the stick is an AI engine that gives you the ability to start other commands in your direction.

From an operational perspective, we need to be at least lacing up our skates.

The Impact of AI on Your Firm

How does getting control of your data and implementing AI realistically impact your firm’s day-to-day operations?

Throughout my career, I’ve worked with all different kinds of firms.

Some of them became massively successful.

Their early success during 2009-2013 came through highly scalable solutions like model portfolios, limited investment offerings and at least the concept that financial planning conversations should be happening within the first few client meetings.

Other firms jumped on the scene with more complex multi-LLC models.

Often you would see a firm bring tax and legal to the client meeting. This would create a formable offering both for retail clients and the advisors that they recruited.

Along the way, increasing acquisitions and the success of index funds led to the need to do far more to differentiate your client experience.

The scale that you may have found prior is often challenged by the fact that you now have far more information about your clients at your disposal.

You cannot realistically sit there and provide the same base services without failing to meet your clients’ expectations.

AI and data ownership allow you to begin to better solve subjective scenarios for your clients and reinvent your operational model.

Consider this:

If you have access to all of the assets owned by your client, it’s far easier to apply a tax optimization exercise and properly update the asset location to improve your client’s tax situation.

If you know your client’s income details and can then run a scan for tax optimization opportunities based on where they live, if they own a business and how many dependents they have, an AI model will allow you to scale this quite well.

As an aside, how disappointing is it for your clients to find tax optimization opportunities from someone other than their advisor? You and your team should be the ones that are guiding your clients through these situations more times than not.

Third-party cash management solutions have been around for a long time. Interest rates were 0, so many of those solutions were likely out to recess, but here they are again. When your clients log in and see 30-50k sitting in cash, they are probably feeling a bit annoyed (at least I know I would be). We know you need to have cash available for fees, but in an automated era, there is no reason not to have it yielding something.

Many advisors have sought to be able to present the history of their client relationship to their clients. The team at eMoney has offered a version of this but often advisors don’t do the greatest job of transferring all that information into one system. Owning your data and connecting it with AI makes it far easier to present this history for your clients in an application or on demand.

Prompt: Tell me all the notable events for the Smith family since 2001. Provide a particular emphasis on tax reviews related to their changes in state and businesses.

With the increasing availability of data and the continued demand for personalized services, embracing AI isn’t just a matter of convenience but a strategic initiative for firms to enhance client experiences, optimize operations, and maintain relevance.

How are you keeping up?