What would you do if your client called to ask about an investment fund projected to underperform similar funds by 3%? How would you react? How would that interaction affect your relationship with the client?
According a report by American Century Investments, roughly 40% of U.S. investors say they would give up some returns in order to make a positive impact on society or the environment; as such, you’d probably be willing to hear out the client if she was asking about a sustainable investment fund. Two-thirds of investors in that group report they’d be willing to sacrifice up to 10% of returns to make a positive impact, so you might actually be more receptive to the fact that the fund could make a real difference in the fight against climate change, or in some other cause your client supports. In that case, the phone call might make you feel like you and your client are on the same page—that she understands you are willing to seek investment opportunities that align with her values.
Of course, your reaction might be much different if you’re skeptical about impact or sustainable investing and prefer to take a more bottom-line approach to your portfolio. In that case, your skepticism might start to extend to your client.
Financial advisors face this type of scenario every day. If an advisor can proactively pinpoint the issues most important to a client and engage that client with relevant information, conversations and product recommendations, she can create opportunities to strengthen, and possibly even expand, the relationship. On the other hand, at a time when investors have instant access to massive amounts of information and the ability to more easily manage their portfolios themselves, advisors who present generic or misguided ideas and recommendations will quickly outlive their usefulness.
In that respect, artificial intelligence can be a superpower for advisors. New AI applications help advisors learn about their clients and customize information, product recommendations and many other aspects of the advisor-client relationship. In fact, some of the most sophisticated AI platforms actually automate much of that process, allowing advisors to personalize service and communications across an entire portfolio of clients.
The Power of Personalization
AI-aided personalization can start before the client signs on. Advisors today have access to prospecting tools that use AI to analyze the universe of potential clients by a variety of helpful categories, including lifecycle (just getting married, trying to buy a home, saving for college, readying for retirement, etc.), interests or values (running a business, the environment, travel, philanthropy, etc.) and even favorite communications channel (text, email, phone calls, etc.). Armed with this data, advisors can tailor their initial outreach and advice to the perfect specifications for each prospect. Similarly, AI is helping investors seek professionals by matching them with advisors that align well with specific financial expertise, values and other criteria, fostering more meaningful and productive advisor-client relationships.
Once a client is onboarded, advisors can use the same type of technology to ensure they keep up with changing needs and interests. There are many ways wealth managers can collect data on clients. Some AI-driven customer service platforms use brief surveys asking new clients to provide information that can help the advisor shape their plans. Other applications go even deeper—with client permission. AI tools can monitor the content clients are engaging with online and on social media to create a real-time view of what they are reading and listening to. This technology allows advisors to alter their approaches as client needs and interests evolve and can alert advisors about any major life change like the birth of a child, a job loss or divorce.
Applying AI to maximize personalization enables advisors to quickly see not only what research report they should send to a client based on their portfolio, but it can automate a series of notifications to address everything from account-related reminders to the significant milestones and life events that clients should factor into their financial picture. From the birth of a grandchild, high school graduation, tailored financial education for college preparation, to advising clients about an upcoming proxy vote for a company they own on a climate policy or animal rights measure —staying ahead of these pivotal moments demonstrates the deep commitment advisors have to their clients and what they value most.
All these AI-supported reminders, communications and education materials enable advisors to regularly connect with clients at just the right moments with the most relevant information and engage in deeper conversations about what’s going on and how they can help.
Advice that Reflects Values
AI is also making investment recommendations more valuable to both clients and advisors. Many wealth managers today offer platforms that allow clients to aggregate all their accounts in one system, including bank, retirement and investment accounts. This gives advisors a 360-degree view of their clients’ financial situations and activities. AI tools can analyze transactions from all these accounts to produce insights that can be shared with the clients. They can also produce highly customized investment advice and product recommendations that are both appropriate to address the client’s current needs and in keeping with the types of strategies, products and risk levels the client has historically preferred.
These capabilities enable advisors to deliver an unprecedented, personalized level of service that would have been impossible just a few years ago. The transformation has arrived at just the right time for advisors. In an age of do-it-yourself investing, AI-driven personalization can dramatically enhance the value a financial advisor can provide.
Personalization is becoming even more important as advisors work to create and maintain relationships with a new generation of investors. In the United States, we are amid one of the biggest wealth transfers in history as young investors inherit trillions of dollars from baby boomers. These young investors are passionate about their values, and they have a clear preference to do business with companies who share those values and an advisor who understands the importance. AI offers a seamless and efficient way for advisors to share relevant educational content with this younger generation, making complex financial concepts more accessible and engaging.
Thanks to AI, financial advisors will be able to understand what young investors and other clients value most, and reflect those values in their advice—even if that means giving up investment returns to help fight climate change.
Mike Alexander is President, Wealth Management and Global Managed Services at Broadridge
Alicia Rich is Head of Client and Advisor Digital Enablement at Broadridge
