Advisers Begin to Embrace Artificial Intelligence

Art by Sarah Mazzetti

Two-thirds of registered investment advisers (RIAs) and fee-based advisers believe artificial intelligence (AI) will give them a competitive advantage, a survey by Nationwide Advisory Solutions found. Among the 33% who were early adopters, 94% believe this is true.

The way advisers are using AI is transformative, affecting every dimension of their customer experience, from attracting a new category of future clients to offering a new universe of products and solutions.

AI uses advances in machine learning, including refined algorithms, predictive analytics, natural language processing, and speech and image recognition to assess big data from disparate sources, evaluate complex problems and help advisers make more accurate decisions. While only 33% of advisers currently employ AI, 51% plan to begin or expand use of it in the next 12 months.

Among the early adopters, 88% began using it, and 84% plan to expand their use of it, in the next 12 months. Thirty-seven percent of the early adopter group project their profitability will expand substantially this year; by comparison, only 22% of advisers who are not using AI say the same. Thirty-four percent of the early adopters say they are optimistic about their financial outlook for this year, compared with 26% of the advisers not using AI. Fifteen percent of the early adopters manage more than $250 million in assets, compared with 11% of the advisers not using AI.

In addition, 16% of the early adopters earn more than $500,000 a year, compared with 11% of those not using AI.

Among the investors, advisers and early adopters who believe that AI will improve the adviser/investor relationship, all three groups say it will increase accessibility of financial planning (46%, 42% and 40%, respectively) and enable making predictions about clients’ future needs (39%, 38% and 38%)