I thought for my first AI piece for this new year, I would try to provide some insight and perspective on the potential impact that is likely to emerge in 2024. Of course, the impact the industry will actually experience will be heavily skewed toward the capabilities and resources that the largest organizations will bring to bear, but given the absolute objective of Microsoft, Salesforce, and others to deploy co-pilot and commercial support solutions to both the enterprise and SME segments, my expectation is that direct and embedded usage will be significantly higher.

Having perused some of the broader aspects of the AI co-pilot and virtual assistance space, it will be in these two areas that the largest impact will be seen. I believe in the past year organizations spent a lot of time getting to grips with the core data management challenges that need to first be addressed to leverage AI, esp. in relation to value extraction from unstructured content sets like email and the vast array of knowledge repositories, and thus, what we will start to see this year, especially from those who have already built the required classifiers, data extraction capabilities, and the computer vision techniques to properly understand document structure, will be a new set of tools that can potentially transform, if supported by the proper behavioural queues, and nudges, not only the efficiency of financial and investment advisors, but more importantly their productivity.

In particular, I am growing optimistic that 2024 could prove to be year that many advisors finally see their lives as data, account, and transactional administrators undergo a significant decline clearing the way for not only better qualified and timely advisory and decision support services, but also an opportunity for firms to significantly boost their abilities to grow their practice through both more client on-boarding, as well as a broader planning and investment capability.

In the world that I witnessed before AI, delivering these benefits was somewhat accomplished when firms were able to build unified digital workflows across different areas of their value chain to support frictionless collaboration, but success in this endeavour proved elusive because it often required too much change management, as well as too much reliance on middleware systems to facilitate the correct translation of data between disparate systems, and business logic.

My intuition and early experience is that the way that co-pilot and VA approaches using natural language techniques are evolving are going to offer a far superior way to not only support the unification necessary, but will additionally be far more able to properly leverage all of the resources that firms have at their disposal to identify tasks, create activities and initiate the most optimal approach toward orchestrating the individual and collaborative routines needed to achieve the right client outcomes.

The early missteps that LLM providers made, and the caution that is now prevalent when it comes to hallucinations, fake information, and the implications for “wrong action” will probably not fully go away this year, but from what I am seeing in terms of the ability to new AI tools to transcribe, translate, summarize, infer, and distil, it is quite clear that if advisors properly incorporate these capabilities to leverage all their different forms of communications that we will see

There has been a lot of chatter in the broader industry about much of what I have mentioned, esp. since the summer of 2023, but I don’t think firms had yet advanced the connection between the data sets that really lend themselves to improving the overall advice process, as well as enable greater efficiency and productivity throughout the wealth management process. My feeling is that during 2024 this is going to change, and for those that get it right, will start to translate into the improvements in the income/cost ratios that have been promised via “unified digital platforms”, but have failed to be delivered.

My prognosis suggests that, while the macro and regulatory change pictures in 2023 very much subdued the impact of AI solutions, and probably translated into more disappointment, and caution that is by no means yet gone, I will “stick” my neck out a bit and suggest that this year will prove the start of a “breakthrough” for AI in the wealth management industry, and represent the beginning of a positive valuation adjustment for those firms that not only embed the AI tooling within all of the key areas of their practice, but build monetary incentives, and change management programs so that the promise this time, gets tangibly delivered.