The extent to which independent financial advisors are using artificial intelligence is only starting to catch up to the “great headlines” about wealth management firms tapping AI, according to Ritik Malhotra, founder and CEO of Savvy Wealth.
For many advisors, the “actual utilization is low,” beyond what has turned into “table stakes now” with tools designed to take notes, transcribe and summarize client meetings, said Malhotra, whose firm provides services such as AI-powered software to registered investment advisory firms. The necessary mindset shift in the industry revolves around understanding how the technology could dramatically reduce the amount of time advisors have to spend on the more menial tasks that take them away from clients, he said. And it’s easier for advisors and clients to adopt AI than it may appear.
“We’re not asking them to suddenly change and send clients this highly complex digital workflow,” Malhotra said. “It still fits into how they’re operating today.”
As part of Financial Planning’s annual IBD Elite study of the independent brokerage channel of wealth management, FP spoke with LPL Financial, Cambridge Investment Research, Osaic, Independent Financial Group, Commonwealth Financial Network, Raymond James Financial Services, Ameriprise and Cetera Financial Group about the firms’ AI tools and investments. The slideshow below highlights a sampling of the eight firms’ responses.
The firms are racing to create AI tools and deploy them for advisors and their teams and for solutions at the corporate level. Six years after the launch of CogniCor Technologies, which developed an AI Copilot for advisors, investors and wealth management firms, the company has witnessed many more broker-dealers and RIA firms trying to leverage AI, according to CEO Sindhu Joseph. AI’s scaling ability allows companies to work with more clients.
“We are seeing that increased adoption from the RIA world, that there’s appetite for these kinds of tools,” Joseph said. “That’s been my personal mission as well, in terms of democratizing the access to wealth by reaching more households.”
Enterprise agreements with firms such as LPL Financial, Cetera Financial Group, Osaic, Cambridge Investment Research, Sanctuary Wealth, Savant Wealth Management, Merit Financial Advisors and Integrated Partners highlight the reach of Jump, which has developed meeting assistants and other AI tools.
The protection of advisor and client data has “been a really important aspect for all of these large firms,” said Parker Ence, the company’s CEO. That remains a concern, but it’s “a pretty easy fix” for AI developers who can create tools that effectively provide the solution while forgetting the underlying personal client data for purposes of future outputs, he said.
“What we’ve seen is that AI has gone from, ‘Does it work?’ to a novelty, like ‘Oh, there are some interesting parlor-trick things you could do.’ Then it was scary,” he said. “Then suddenly it became very practical, and now I think firms are looking at this like, ‘We have to have this in our tech stack, or else we are falling behind.'”
With integrations across every possible customer relationship management software and enterprise agreements at firms like Osaic and Cambridge Investment Research, the AI assistants developed by Zocks enable advisors to “offer more services and just expand what they’re doing with the clients,” said Mark Gilbert, the firm’s CEO and co-founder.
For clients at any tier of a firm’s segmentation, advisors can follow up after a meeting or phone conversation with the key takeaways and tasks for the customers, at a cost of $800 per year for a basic account or $1,300 for teams of independent advisors, Gilbert noted.
“They’re able to actually stack those up and frankly get back to that client often before they’re in the car in the parking lot,” he said. “They start to see value in the first day or week, as soon as they start meeting with clients.”
Executives with independent wealth management firms are “thinking about how they can use it,” because they “know its important to their advisors and to investors,” said Andrew Altfest, president of New York-based RIA firm Altfest Personal Wealth Management and co-founder of AI-powered estate, tax and insurance software firm FP Alpha.
However, more firms must prepare the tools to set up for “a future in which it’s going to be an advisor who’s working directly with clients, spending more time with clients” by guiding them on key planning strategies that go far beyond the starting point of AI with note-taking, Altfest said.
“We’re at the infancy,” Altfest said. “We’re just scratching the surface at the entry level.”
For a look at how eight of the largest independent wealth management firms are adapting AI into their businesses, scroll down the slideshow. To read the main feature of this year’s IBD Elite study of the largest independent brokerages in the industry, “How independent advisors win the AI adoption race,” click here. And, for a deep dive into all the data from this and previous years of the study, follow this link.
