Generative artificial intelligence’s move into financial services is the industry’s “second big shift” after crypto where innovation is progressing at the same rate for both consumers and institutions, according to Cetera CEO Mike Durbin.
At the Financial Services Institute’s annual OneVoice conference, Durbin compared the tech’s move into the wealth management space as akin to blockchain, in contrast to past innovations that flowed downward from global sovereign wealth funds to big institutions and, finally, to within consumers’ grasps.
But now consumers are running the same race (at the same pace) as the industry’s largest players, he said during a panel of executives including Raymond James Independent Contractors Division President Shannon Reid and Sanctuary Wealth CEO Adam Malamed.
“So we’re being WedMD’d, folks,” Durbin told the assembled crowd. “And it’s going to happen really fast, so we have to embrace it, because it offers a ton of promise.”
AI was a watchword throughout the conference in Orlando, Fla. Noelle Russell, the global AI solutions lead at Accenture and founder of the AI Leadership Institute, focused on the promises and pitfalls of AI’s encroachment into the industry.
Before her speech, an AI avatar of Russell gave an onscreen introduction to the real speaker. Russell constructed the avatar in a matter of minutes, and Malamed admitted the presentation shook him. He worried about the ramifications of using AI beyond merely enhancing productivity.
“Something is going to make a decision for an advisor, or we’re going to be using it to make a recommendation,” he said. “Who knows when someone’s going to make an avatar of your financial advisor giving advice? As we all know, the regulators are going to have something to say about the way it’s used.”
With the introduction of ChatGPT and other innovations, advisors are sussing out what the tech means for their practices. According to Durbin, Cetera mainly put AI to work in assisting general operations, from employing bots in repetitive operations tasks to using AI instead of a service associate during a chat.
Durbin considered those “training wheels applications,” but agreed simple uses for the tech could demystify AI for clients and advisors. Reid said Raymond James used AI to help advisors easily generate necessary reports and evaluate investments through a fiduciary prism. The firm also recently launched an AI-based tool to scrape data and give advisors recommendations on what opportunities clients may want to take advantage of (though it doesn’t mandate the advisor act on these recommendations).
But with AI’s promise comes threats in the form of cybersecurity and ransomware. Though the core concept of ransomware has remained the same, generative AI could make attacks on institutions (and individuals) infinitely more complicated, according to Jonathan Klein, the Global Head of Client Security Relationship Management for Broadridge Financial Solutions.
“I always found that the weak link on a lot of these phishing emails was they’re poorly written and you could pick them out pretty quickly,” he said. “I think with AI, as we teach it, it’s going to make those emails that come to you far better and far harder to detect.”
The overt focus on AI rankled one attendee in another panel discussion who asked speakers to offer a “tangible” example of financial advice or back office function that AI could do for advisors today, particularly when the past is littered with other technologies that similarly threatened to be industry-altering game-changers.
Mitch Bell, a managing director with BNY Mellon Pershing, said AI would help advisors onboard clients in seconds, rather than minutes, hours, or days. Cerulli’s Wealth Management Director Mike Rose touted AI’s growing role in speeding compliance oversight.
The attendee questioned whether the industry was too liberal in its terminology, equating the newest developments in processing power and tech to AI.
But Andrew Christofferson, the CEO and president of Berthel Fisher & Co. Financial Services, said he’d heard a prior speaker detail a way in which AI was already making a real impact, revealing that “in the very short-term” AI would be replacing 150 jobs at their firm.