Wealth managers say AI will help advisers, not replace them

In short: Wealth and asset managers say AI is becoming a support tool that helps staff work faster, even as investors worry it could replace advisers.

What's going on

Wealth management companies faced a sudden shock earlier this year after US fintech Altruist announced a new AI tool designed to personalize investment strategies. Shares in several big wealth managers fell that day, including St James’s Place in the UK, which dropped more than 13%.

The drop did not last long, but it showed a clear fear among investors. The worry is that AI could give financial guidance directly to customers, which could reduce the need for human advisers.

Wealth managers say that is not how they see it. St James’s Place CEO Mark FitzPatrick said AI is already cutting paperwork and data entry, and reducing advisers’ overall workload by about a fifth. He said clients still want “trust and peace of mind,” which is hard to get from software alone.

Asset managers, the firms that invest money on customers’ behalf, report similar uses. Wellington Management said it uses AI to review and summarize notes from about 18,000 meetings a year, and it has an internal chatbot called Welly to answer questions from research. The company said AI cannot place trades or make investment decisions, and that it is a support tool.

Surveys suggest adoption is rising. SimCorp said 70% of buy-side firms are successfully using AI, up from 10% last year that were actively exploring it. A separate survey by Edelman Smithfield found professional investors often use AI for company research and risk management.

What to watch

Consultants say the biggest savings may come only if firms redesign how work gets done, not just add AI on top. Companies whose investment process is easy to copy may feel the pressure first, while firms that rely on human judgment could hold up better.

Source: Financial Times