Can AI outperform a wealth manager at picking investments?

Edward Morris, a technology entrepreneur and AI specialist, made one of his most profitable investments by using the AI-powered virtual assistant ChatGPT for due diligence in the $5bn initial public offering of chip designer Arm. Morris typically relies on AI for understanding complex wealth management and finance topics, finding worthy investments, and identifying discrepancies in bank statements. He has also linked AI tools to his WhatsApp and Telegram accounts to stay informed about investment opportunities.

Morris believes that AI can also benefit wealth managers by allowing them to run their ideas past an extra set of eyes, complete time-consuming tasks, help clients get their estates in order, assess the potential impact of economic policies, and find sector-specific investment opportunities. He advises wealth managers to upskill in AI and prompt engineering to maximize the technology’s potential in their day-to-day roles.

Many wealth management groups, including Morgan Stanley, are already investing in AI technology. For instance, Morgan Stanley has developed an AI assistant that enables its financial advisers to find relevant information from an internal database of more than 100,000 documents. This technology saves time by allowing advisers to efficiently source and retrieve internal information.

As AI continues to automate various aspects of wealth and investment management, there is a growing concern about whether it may one day take jobs. However, Mohamed Keraine, global head of digital, wealth, and retail banking at Standard Chartered, views AI as an opportunity to complement human attributes rather than replace them. He expects AI to help wealth managers form stronger relationships with their clients by delivering enhanced, seamless virtual interactions and improving access to wealth management services.

While AI has improved efficiencies in wealth management, it is not without challenges. Major concerns include providing bad investment advice, data privacy issues, and cyber attacks. Investors should be cautious about the source of the financial advice they rely on and invest only with reputable firms who have designed the system and built in the proper safeguards.

Despite these challenges, the potential for AI in the world of finance is immense. With the rise of agentic AI systems, robo investors could potentially mimic the strategies of successful investors like Warren Buffett and revolutionize the finance industry. However, this will depend on high-quality training data, robust risk management frameworks, and human oversight.

.st1{display:none}See more