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Advisory Firms Say Thanks, But No Thanks to AI 

Artificial intelligence may be one of the fastest-growing tools in business, but don’t tell that to the compliance department.

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Photo by Markus Spiske via Unsplash

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Artificial intelligence may be one of the fastest-growing tools in business, but don’t tell that to the compliance department.

More than 6 in 10 advisory firms have no plans to develop or use client-facing AI applications, according to a new report from the compliance consulting firm ACA Group. In fact, only a small portion of the roughly 600 compliance firms surveyed use the technology at all, and just 1.5% said they frequently depend on AI-equipped robo-advisors to guide investment decisions. About 12% of firms surveyed said they have a ban on all AI tools altogether. Harsh.

Cannot Compute

After “eliminate” and before “delegate,” “automate” is key to completing tasks in the workplace — at least, that’s what all those LinkedIn posts say. But when it comes to managing people’s money, investment firms and the government are careful not to let advisors put all their trust in fast-processing computers just yet:

  • When asked what their formal approach to AI tools is like, about 40% of firms, the plurality, said they don’t have one, and are in the midst of or have yet to start evaluating its usage. AI ranked third among the “hottest” compliance topics for 2023, the survey found, with 46% of firms putting it on their list of important issues. The first and second spots were held, respectively, by off-channel communications between advisors and then client and marketing strategies.   
  • Earlier this month, the Securities and Exchange Commission suggested that it may take more time to issue regulations on how brokers and wealth managers can use AI, predictive analytics, and large language models when working with clients. The rules, which were proposed last year, would require firms to make sure use of AI doesn’t put their profits ahead of investors’ portfolios. Republican SEC Commissioner Mark Uyeda criticized the proposal as “breathtakingly broad in its reach.”  

Busy Work: Some of the biggest names on Wall Street have already made the plunge into AI tech. Goldman Sachs deployed its first AI tool for code building last month, and Morgan Stanley recently rolled out an application for wealth managers that can take notes during client meetings and draft emails, which is supposed to increase advisors’ productivity. As for now, it seems the grunt work can be handled by robots, but firms are still leaving the important decisions to the professionals. 

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