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The advisor’s guide to AI

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Once the domain of large institutions with deep pockets, artificial intelligence is being adopted by registered investment advisors and fee-based advisors to enhance the human connection with clients — and gain an edge over the competition — by transforming every aspect of the customer experience, from the front end to the back office.

Advisors say that customer experience is a leading competitive advantage, according to the latest Advisor Authority 360-degree Special Report on the DNA of the advisor-investor relationship.

Ninety-four percent of RIAs and fee-based advisors say that the customer experience is important to their value proposition, because it improves client retention.

Both advisors and investors agree that building a personal one-on-one relationship is among the top factors to ensure success.

And AI is key.

RIAs and fee-based advisors who earn more and manage more assets under management are more than twice as likely to adopt AI and data analytics to better understand and serve clients, according to an Advisor Authority special report on the most successful advisors.

Historically, the industry’s giants have been at a clear advantage when it comes to gathering and leveraging data to advance their business goals. They have been using behavior-based segmentation for decades, creating more targeted marketing and communications to attract clients, as well as offering customized products and services to retain existing ones.

But processing reams of data from multiple sources could take months, involving numerous specialists, across dozens of different departments.

As the power of financial technology increases exponentially — at the same time that it becomes more accessible and more affordable — many advisors are technology-obsessed.

They use more technology, and spend more on technology, to differentiate their firms and to achieve scale. They employ the internet as the channel to pull in data and to push out information, in highly targeted ways.

They can employ Robotic Process Automation to streamline repetitive manual tasks, improve accuracy, reduce costs by as much as 80%, and reduce time to perform these tasks by as much as 90%, according to a recent study by Accenture.

They also use technology to connect with clients and enhance the customer experience. They have greater power to capture and leverage data as robust cloud computing, customizable customer relationship management systems and intelligent reporting tools become table stakes, even for the smallest practice.

And they are now using AI to dig deeper, capture more client data and take action on these findings in ways that can personalize the experience for clients — and optimize the outcomes for their firms.

AI can help advisors evaluate complex problems, make more accurate predictions, and arrive at decisions with a greater degree of certainty and success. By employing refined algorithms, predictive analytics, natural-language processing, speech recognition, image recognition, and other advances in machine learning, AI can quickly assess and organize complex information and disaggregated data from disparate sources, to efficiently identify patterns and trends.

Every time a client interacts with the firm’s website, enters the client portal, reads the blog posts or replies to emails, AI can help advisors learn more about client needs and what matters most. In this way, AI can help advisors perfect the customer experience — or pivot and shift — to personalize that experience for each individual client.

Likewise, with AI advisors can leverage what they have learned about existing clients to make more informed decisions around marketing and prospecting, to attract and retain new clients.

AI also reduces the amount of time and money spent on more routine commoditized tasks, such as basic portfolio management, so that advisors can focus on “the 20% of non-routine tasks that drive 80% of value creation.” AI not only creates more time for advisors to meet face-to-face and one-on-one with clients, it also enhances the quality of these meetings.

Advisors can move beyond financial matters, gain greater insight on clients’ unique preferences and important life goals. In addition, advisors can arrive at a more customized set of solutions to serve clients and their families more holistically to capture a greater share of wallet and retain more assets as they pass to the next generation.

The client experience can be defined as the way that an advisor and client interact at all points in their relationship. It is essential for nurturing the relationship, ensuring satisfaction and building a profitable practice.

Technology is a means to this end but not a replacement for the human touch.

Even in this age of instantaneous digital communications, where clients expect things at internet speed, both advisors and clients still identify face-to-face meetings are their preferred form of communication.

Just as advisors and clients agree that a personal one-on-one relationship and quality of communication are the top two factors that contribute to a successful customer experience, they also rate trustworthiness as the single most important attribute in the relationship. And when choosing an advisor, investors demand unbiased advice, a fiduciary standard and personalized planning.

In the end, people want to connect with those who understand them and can align with their best interests.

When thinking about every single point of contact with clients, from the front end to the back office, AI can affect every single step along the way to create a better customer experience and a better set of solutions.

Advisors can better understand and manage the market, better manage and build clients’ wealth, and better manage and build the practice.

If the internet is the superhighway for the rapid transit of information, then AI is the E-ZPass that helps advisors become even faster and more efficient. With AI, an advisor know so much about the clients that he or she can be exponentially more effective in creating the experience that will move them forward in their financial lives and drive the firm’s success.

This story is part of a 30-30 series on how technology is changing your practice. It was originally published on Oct. 18.

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