In a future where robots will be performing almost all functions under the sun, robo-advisors are not hard to imagine. Soon, wealth management advice will come from bots that are free of calculation errors and faulty/biased judgement, unlike human advisors.
The interesting question here is not whether these bots are the future, but ‘will they replace wealth managers completely’? Going by current understanding, that is far from reality.
For a better understanding, let’s look at how AI and machine learning are changing the game for asset managers and the criticisms around it.
Three areas where AI and machine learning have been instrumental in aiding wealth managers are data analytics, forecasting and risk management.
They are critical for portfolio designers to take the final call but the kind of effort that goes into each of these as of today is big pain point. AI and machine learning will play a key role in solving these and equipping such experts with key data points.
It will be cakewalk isolating relevant data using machine learning and then sifting through to offer most relevant data points and aid decision making.
Recognizing patterns and trends helps in predicting and forecasting the best investment areas and mitigating portfolio risk. In fact, risk management is one of the greatest advantages of AI for wealth managers. It can help arrest trends immediately thus improving responsiveness and hedging risks as soon as possible.
Advantages are big but will these technologies be the new age advisors?
Critics say that AI can see only a part of the situation, unlike human beings who can look at a lot of other machines & tools, as well as external factors that machines may not be aware of.
The fact is that intelligent machines are a great asset but wealth managers are going to be the key players in helping investors design their investment portfolios.