AI and and the next step in wealth tech digital innovation

Andrew Altfest, President, Altfest Personal Wealth Management; Iraklis Kourtidis, CEO, Rowboat Advisors; Sam Palmer, Head of Strategy, Digital Wealth Planning & Advice, J.P. Morgan Wealth Management

Transcription:

Sharon French: (00:09)
Good afternoon, everyone. And welcome to the AI track. My name is Sharon French and I serve on the executive committee for TIFIN. TIFIN stands for technology in finance, and specifically TIFIN was really started to help build engaging wealth experiences to better financial lives in particular, really one of the pioneers combining AI and investment intelligence to change the user experience, both in wealth, as well as investment management to specifically improve individual outcomes, therefore because AI and machine learning is at the core of what TIFIN does, we felt, that we wanted to be engaged in this track that has three fabulous panels, that I will be introducing. And our first panel is called artificial intelligence and wealth tech now, automating the way to efficiency, to my right is Suzanne Siracuse, who is the CEO of Siracuse, Suzanne Siracuse Consulting and she'll moderate the discussion. To the right of her is Andrew Altfest, and Andrew is the president of Altfest Personal Wealth Management. Sam Palmer is to the right of him, I think, if you all sat in the right order, head of strategy, digital wealth planning and advice at J.P. Morgan Wealth Management and to the right of him is Iraklis Kourtidis, who is with Rowboat Advisors. So without further ado, I'll be back up to introduce the two other sessions, but I'm going to hand it over to the moderator, Suzanne Siracuse. Great.

Suzanne Siracuse: (02:04)
Well, good afternoon, everyone. I feel like we need to have tea in this room, right thanks for coming to the first of the three sessions that are gonna be focused on AI and automation and digital tools and wealth management if the session today is anything like our prep call you're in for a real treat, cuz I think we've got three incredibly smart gentlemen up here that are gonna talk about some of the things that are, happening within our industry and, that we think you'll find interesting. So before we get into the questions, what I'd like each one of our panelists to do is take a minute or so, talk about your role within your firm and why digital and technology tools are critical and play a pivotal role for what you're doing at your firms. So Iraklis, can we start with you?

Iraklis Kourtidis: (02:55)
Sure.

Suzanne Siracuse: (03:01)
You know, honestly we we probably don't even need microphones.

Iraklis Kourtidis: (03:05)
So Hi everyone there for do this. I was only a software developer. Actually I was previously a software developer for maybe someone and, about 10 years ago, I built a direct indexing with bachelor for which back then was a weird thing and, was hard to market in a hard to sell and now of a sudden people paying attention. So, I am the last person, to start companies. I'm not a company guy, but even I thought that there's a huge potential in, this cause you can like reduce increased return from tax or whatever. So I quit six and a half years ago and I started my company called pro advisors where we basically built like, the core investing engine. I usually called it. I you didn't call it inside, but then everybody under five blind south, but basically we're just building the investment logic portion, my company for the last six and a half years

Suzanne Siracuse: (04:04)
Yeah, there we go. Thank you. And you failed to say that he does business on his boat off the coast of Washington state, which I find fascinating

Iraklis Kourtidis: (04:16)
It's in California, but also it's the marina is not as exciting

Suzanne Siracuse: (04:19)
Okay. Wow, I like the fact that you'd be sailing around just like taking calls, coding, save on capital things. Sam

Sam Palmer: (04:31)
Thank you. And thank you for having us here, Suzanne. Absolutely. Hi everyone, Sam Palmer, I'm with JP Morgan and, to answer your question, Suzanne, essentially I run a small, FinTech inside JP Morgan wealth management. I think that's the best way to describe it, where we focus on building tools, where we bring technology to digital, planning to bring in financial health and financial tools to our clients. And essentially the mission of what we're building is to make sure that we put more such tools in the hands of the consumers that we democratize, things that used to be the domain of only the advisors and at the same time that we connect the data and those tools, with the advisors so that we can create, a better connection between the clients and the advisors that serve them.

Suzanne Siracuse: (05:20)
Wonderful. Perfect. And we're gonna be talking a lot about that and just side note, can I just share this Sam that you used to be an actor in your, former life, which I also find fascinating and I'm like sharing all kinds of personal, personal things that we found on the call so, and then next up last, but not least Andrew altfest.

Andrew Altfest: (05:42)
Hi, everyone, great to be here with you back in person at, invest, so I have two big jobs, first I'm an advisor, I've been an advisor for over 18 years and I'm president of a larger RAA in here in Midtown Manhattan, alt Fest, personal wealth management. We manage about 1.6 billion for high net worth individuals, probably a little less today with the markets, and I'm also the founder of a relatively new software company called FP alpha. And what F P alpha does, is it allows advisors to take their clients' financial documents like legal documents, estate documents, wills trust tax returns, insurance policies upload them F P alpha uses AI to read those documents, extract the information from them, summarize them and then find gaps and opportunities in 16 areas of planning, giving those back to advisors to share with their clients, while being completely complimentary to the traditional financial planning tools on the market today. So, really looking forward to the discussion, that we're gonna have. It should be fun.

Suzanne Siracuse: (06:51)
Great, well thank you all for being here and thank you all for taking time outta your day, to be at our session. And so to kick things off, I wanna talk about trends in general and the biggest tech trends that you all are seeing in your respective areas, that are affecting wealth management and what are the implications both long and short term? So Sam I'd love to start with you.

Sam Palmer: (07:18)
Thank you. So the biggest trends, I think the first one is a continuation of a trend that we've all seen, which is access and democratization of access to investments, to wealth management, to clients, and what has started with clients having to interact with an advisor even to be able to trade stocks, moving over through, access to digital tools and robo, to what I'm observing today, which is more tools in the hands of the consumers and tools such as financial planning, tools. Tools, such as financial health tools, an ability for the client to be able to track, and see their cash flow, see their network, be able to do the plan themselves right from their phone, is I think something that's, that's quite exciting. So, that'll be one. And the second one, that also I'm excited by is the fact that what used to be a one off process where a client would meet with an advisor, create a financial plan, and then that's it, they leave the plan is stale.

Sam Palmer: (08:23)
Essentially the moment they leave the, advisor's office now is becoming continuous, and a great analogy is in the medical industry. So, not so long ago, you had to go to a doctor and a doctor would check your blood, check your vitals, and that's it, that's your annual checkup today. There are tools that you can order where you plug in a little device into your arm and with Bluetooth, you can, for example, monitor your glucose, monitor your blood, right. And you have all of that information and insights right on your phone. And this is analogous to the trends that I'm observing, in the wealth tech industry as well, where we are able now to have continuous monitoring as an individual, as a consumer of my cash flow. And therefore, I don't need to have a one of conversation with one advisor, but I'm able to have it on a continuous basis. So those would be two trends that I think are quite exciting.

Suzanne Siracuse: (09:16)
Yeah, no those are, those are great callouts. And it's really fascinating when you think about how far we've come in a short period of time in terms of both consumers and advisors being more comfortable with using these digital tools to provide. And I know we'll get to this a little bit later did to provide advice at scale so thank you, Iraquis. What are your, what's your thought on some of the top trends going on in the wealth management industry and what are those implications both long and short term?

Iraklis Kourtidis: (09:47)
Sorry, I had to put this here because I'm Greek. I need to move my handsing, so I feel, and this was kind of a shock to me. I feel like the, obviously, the trend will be automation, but specifically I give you the context. I think what happens is over time, like as years go by older people who want one particular style of service, depart this world for lack a better term. And then new people come in who want different things. And the thing that shocked me is like the extent to which within a few years, people almost would pay money not to interact with humans, obviously not in all cases, but I think like, this is one trend of like automating things, mostly because this is what people want. Not because it's cheaper way in like, you know, we can give it to you for less and to steal some insight from the CEO of welfare. And when I was with there, he said that there's, he thinks that people younger than me. Well, that's basically everybody, but he thinks that people younger of a, than a certain age would rather pay money to not have to interact instead of the other way around. I thought, I mean, that's a little extreme, but that's what I'm just borrowing somebody else's insight. I don't have enough myself.

Suzanne Siracuse: (10:52)
So basically what you're saying is that that there people will pay a premium to go completely use technology and avoid human contact.

Iraklis Kourtidis: (11:03)
Not quite, I mean, this is maybe an extreme form of this, but my point is that there's enough of a market for automating things, for people because people would almost prefer it. But even if they're, 50-50 about it, it's still worth it because, you know, it's cheaper to do things, obviously if you automate. Yeah. So next thing I'm but the point is the generational transfer where slowly the people who are on one side of the average drop out of the average calculation, the new people come in. So that changes the demand for things that are fully automated. that makes sense.

Suzanne Siracuse: (11:34)
Interesting. Yeah. That's, there's probably plenty of examples to cite from that too. So thank you for that. And then Andrew, what about you? What are the top trends that you're seeing? I think interesting from your point of view, as an advisor, but also as the CEO of a new tech company.

Andrew Altfest: (11:50)
Yeah. So I think the big trend is digitization, which is going to lead to the use of AI and allowing us to do things that, the advisor industry could have never dreamed were even possible before. And so every conference we go to, what do we hear, we hear about, the digital experience in the sense of being able to provide and show things to people in a way that enhances their experience. What we'll see next is we'll see all that digital information turn into actionable automation, allowing advisors to do things, to increase their, value and drive wellbeing, with their clients that, they never, would've been able to scale without, the use of AI. And, I think we're, we're starting to see this, already.

Andrew Altfest: (12:41)
And so what do we have today? We have all the CRM data. We have transactional data. we know how people are spending their money. We used to have a, a paper office right now. Everything is all these documents are digitized. And so what we're seeing is we're seeing now starting to see AI being applied, whether it's, through voice, through questionnaires, who likes to fill out a questionnaire, right? Whether you go to a doctor's office or in the financial planning process, people hate it, right? And it stops 'em from taking action. Now you can fill that out through voice. Your CRM will tell you which of your clients are at risk based on their, on their behavior so you're seeing AI in that sense with FPL alpha, the technology company, I started, you can upload a client's legal documents, their wills and trusts, and F P alpha will tell you how their estate plan is set to transfer and will show you visually just based on the upload of the documents, and then tell you what's going on in their estate plan, that needs to be improved.

Andrew Altfest: (13:44)
So you don't need to be a lawyer. You can automate that work and provide something much more valuable, to clients without spending a huge amount of time. That's how I see AI starting to be applied. And it's based on all the digitization that's happened, that's set the stage for the next chapter in the industry.

Suzanne Siracuse: (14:05)
Yeah, those are great points. And, we were talking before we, we came up on stage a little bit about how so two weeks ago I was, hosting a diversity inclusion and belonging think tank. And one of the questions that came up is how can technology play a role in increasing access of financial advice and wealth management to those that maybe aren't currently being served by the wealth management industry or financial advisors. Right. And so, part of what I think we're seeing with some of these tools being developed is gonna go beyond just a really great business case. It's actually going to impact the people that need advice the most. And I think that is for me, one of the biggest, biggest trends that we all should be paying attention to, because it will only, better our country and the people in it. And Sam, I wanna go to you with that because you were talking about some things that, that you're starting to do at JP Morgan around that exact application

Sam Palmer: (15:13)
That's right. So, one of the things that, we've been excited about is, again, in the spirit of democratization and being able to use technology to reduce the cost, as you were talking the cost of some of these solutions, the benefit of being able to do that is that now we can work with, we can make any of these tools, we can democratize them so we can work with clients further down the market, if you like. and on the flip side, it allows folks who may have not had access to financial advice to financial planning to have that access. Right. and I think that direction is something that, from a perspective of financial health, financial literacy is very important and something that we're quite excited.

Suzanne Siracuse: (16:00)
Yep, and a lot of times you don't hear those two, like diversity and technology correlate together, but I think it is a really big trend. And I think some of the things that each of your firms are doing actually helps support that too. So, just one of the things to note, I also wanna kinda shift gears a little bit to talk about the various ways in which financial advice is offered, right? There's, technology focused, robo advice, there's human focused, which is obviously through financial advisors, and then there's the hybrid options, right? Like man, and machine. So I wanted to discuss this a little bit more and where you think our industry is headed, as it relates to those three areas of how advice is being delivered. So Iraquis, I wanna start off with you and you were talking a little bit about will people pay a premium for the human element or the technology element?

Iraklis Kourtidis: (17:03)
I mean, in all fairness, I can't really speak to that with much knowledge, other than what I saw at the wealth front. I think there are some people who actually preferred one way or another, but I can say for sure sorry, this should have been more insightful. I think that people are willing to pay a premium for, to answer a different question so that it will not leave this microphone without having said 18 halfway insightful. I think that there's an element of paying for like the trend that I see is that there's going to be more like the portfolio management is something that's automatable and that's something that, people will be willing to have machines do. I mean, they're already do in the way with the robots. And then more of the the involvement of, humans in this hybrid model would be for, things like determining people's, what is the right profile for them? What's the right portfolio for them based on the risk profile these types of high level things, but not the day to day management of the portfolio. Robos, I think were revolutionary that idea, but they also are like, you get like everything together, you also get this, they determine what you should get, and then they automatically invested. But I think like there's gonna be a trend towards these things being done more automatically. And then people focusing on like the higher value add stuff.

Suzanne Siracuse: (18:30)
How does the current market, and right. You had mentioned before that we were in the, you know, longest bull market in history, right? That's changing and people almost no matter what, in spite of whatever they were doing were having positive returns. What is, how is the change in the economy or the change in the market going to potentially affect the way that someone would receive advice and the premium that they would pay for really looking at things holistically?

Iraklis Kourtidis: (19:04)
Okay. Well, this is a set of thought that I had there just my opinion, I guess, but I'm unfortunately old enough to have lived through the.com bust. I lived in, Menlo park again at the same time. And there were a lot of firms that due to other reasons, not accommodated, interesting policies. There were a lot of firms that, came into life and all these firms would not have been there, had the economic situation, not been like this. I think that now, because we've been in such a long bull market for so long, there's so much money coming in, which creates all these companies. Like everybody wants to democratize this and that, or in our case. And then you have all these firms that come in and then they're competing with each other and then bigger firms like JP Morgan and say, oh, we need to do something cuz this startup is doing this. So if all of these things were not there, I think things would be very different now, and my point is that a lot of what we see is difficult for human nature to detach from what we're seeing and look at multi-decade things, cuz human nature is not built that way. But I think like a lot of what we're seeing a lot of what's happening could be a result of this. And specifically the things that we discussed before I feel like, and again, this is a conjecture that if the economy turns and people have less money to spend first, there's a less discretionary money to spend on stuff, aspect, which would also mean people have your personal trainers or the gym like everything people do. Then I think that maybe part of the reason why wealth management has gone done so well in the last few years is people say, oh, my advisor is making me money. And if this changes, maybe people are going to be less willing to pay a premium for that service because they don't get that aspect. Now of course in practice advisors say, okay, we're not portfolio managers, we're not going managers. We're not going to beat the market, but in the end people expect this. So it's possible that if things turn and it's hard to know because there's no, AB test we can make, but it's possible that if things reverse, the industry will see like a lot of changes because of that.

Sam Palmer: (20:56)
Okay, yeah If I can add something Suzanne. So I think exactly, as you said, we've been through the longest market bull marketing history. So there, and there's an entire generation of folks who think that the stock market is what is a savings account, right? you put money in, it just grows up, in a market like that. Technology driven, investment solutions like robo obviously works for everybody. Right? I think that right now is where we are going to have a little bit of verification and my personal, not necessarily representative of, my firm's view is that it is at the intersection of the technology in the human where a magic happens. Right? So on the one hand we have amazing technology. We can have AI, which to demystify essentially just means a tool that can crunch more data than a human can and can provide insights to the advisor, to the client that can then make the choice, but that doesn't obviate the need for the advisor, but it changes the role of the advisor and emphasizes the coaching component. Right, if you guys haven't read, I recommend the book by Jeff Chrysler is called dollars and cents. And in that book, Jeff gives an example, right? When researchers ask clients, could you live on 80% of your current income in retirement, three quarters of people say, yeah, when you flip the question and you ask, could you live on 20% less than you're making today? You know where this is going, three quarters of people say no, why behavioral science loss of version is activated. So again, being able to understand that as an advisor and being able to have a conversation with the client enabled with the technology that AI or non-AI solutions provide is I think at the intersection of as I said earlier, where the magic happens.

Suzanne Siracuse: (22:43)
Yeah, those are great points. And Andrew you now have a client I'm giving away the secret, they were completely sold on, on doing everything through robo. And what was the story? What was the catalyst that made them say what, we're now at a point where we wanna use a financial advisor?

Andrew Altfest: (23:07)
Yeah. To start with it's because robo advisors are good, they solve the problem of, I have $10,000. I want to have an automated solution to rebalance, a handful of index funds. I mean that's out there that robos have solved that problem, that doesn't need to be solved, but for everything else going on in your financial life to drive financial wellness, they're not gonna help with that. So, these clients I've worked with for a couple of years now, they're high earners. They had relationships with three robo advisors. but everything going on in their lives, I mean, they were unmarried, the husband was a high earning lawyer. His partner was a physician. They have two children together, no estate plan in place they had inadequate insurance. They had, were paying a huge amount in taxes with no planning. So God forbid, if one of them were to pass away the money wouldn't be going to each other they would have a big tax bill. They wouldn't have enough money to sustain their lives or in the event of a disability they're hating how much they were, paying in income taxes. And beyond that their relationship with the robos, I mean, they had three robo, advisors and they had a big pile of cash. And so their, their portfolio wasn't being managed correctly. So you know that if you want to put $10,000 with a automated solution it's out there. What advisors need to do and are recognizing particularly the next gen of advisors is that they need to be solving clients, bigger problems. They need to throw themselves in the middle of everything going on in their client's lives and solve those problems is the only way you're gonna be ever able to do that at scale is by using technology and especially AI. And so that's where I see advisors going and I don't see robot advisors ever being able to provide any level of value like that.

Suzanne Siracuse: (25:13)
Yeah. I mean, again the title of this session right, is AI and actually automation and digital innovation, and just how certain things can be automated to make an advisor's life easier in order for him or her to serve more clients. Right. And that's really, I think the big exclamation point to the session is that the there's going to technology is going to allow for a lot more people to get access to advice, as well as it'll allow advisors to serve more clients through scalability of technology tools that are out there. So what what is the most exciting thing as it relates to AI, Andrew, that you see happening right now in our industry and for the future too, like now that exists, but like what about for the future?

Andrew Altfest: (26:09)
The most exciting thing for sure is the ability to mass customize. And so let's look at an example I'm working right now with, on the advisory side with a client. Unfortunately she has early Alzheimer's and her husband is in even worse shape than, than she is health wise. And they have no kids. And so she called and said, you know, I need help and peace of mind. I mean, how do you get, what peace of mind does she need, she needs to know how my bills gonna be paid when I can't pay my bills, how, how who's gonna take care of my medical care. Can I afford to pay for these expenses, these healthcare expenses ongoing for potentially a very long period of time. what are the tax planning opportunities? I just retired. I'm in a low bracket right now before taking money out of my retirement accounts. And and so the advisor, you have to be able to put together a custom plan for someone like that, which involves both advice, across many, many areas of planning, plus the coordination, bringing in all of these resources, the bookkeeper, the attorneys, the coordinating with the CPA on the insurance, on everything. And so you have that client kind of client, but then you also have the client who is the Henry, for example, who just wants, he wants to know, loves sustainable. Investing, wants to be able to save towards short term goals. Long-term goals just had a family, so wants an initial estate plan in place and life insurance needs life insurance, and wants to reduce their taxes.

Andrew Altfest: (27:44)
So you have to be able to go between these types of clients, providing different experiences. And the only way to scale that is by using AI. And that's what AI is now allowing us to do is to be able to figure out what's going on in someone's life and get to those advice opportunities. And so the advice scale is the most exciting thing to me. And it's allowing us to kill the sacred cows, Hey, this is only for the wealthy you this is I can only do this for a 50 million client. No, that's gone those days are over.

Suzanne Siracuse: (28:17)
Yeah. First of all, that was a great summary of and great, future for where AI is taking us and advisors and their clients believe it or not, we only have a couple minutes left. So Sam, you wanna add to that? What has you really excited regarding AI or automation as it relates to the wealth management industry?

Sam Palmer: (28:41)
Sure. Happy to personalization with actionable insights. So, what do I mean by it? And let me paint it in the reference or in the spectrum of dynamic planning. So imagine if a client was able to aggregate all of their accounts, doesn't matter where these accounts are sitting into one place, be able to connect all of that into a financial plan, that they can create themselves in a simple manner, right? From the phone or right from the computer, where that plan automatically. My favorite word connects to the advisor who is able to see that, but it stays continuously updated when the market changes. The plan changes because everything is aggregated. If the client's spending is changing, the plan is changing and is able through AI, like solutions provide actionable insights either to the consumer, Hey, you can do this, do that, spend safe, pay off your mortgage or to the advisor. And the advisor doesn't have to manually segment their book. Oh, which is the client I haven't met with in the past three months, but is able to very specifically focus on the clients that need their help, right. At this very moment because of the changing situation. So I think this is something that I'm very excited about as I look at the availability of all the tools that are in the market.

Suzanne Siracuse: (30:00)
Yeah. It's, there's, so much, I mean, we were just at the T3 conference last month and the amount of new tools that are out there now we just need the advisors to adopt them. Right so Iraqlis the final word. where does automation fit into all of this?

Iraklis Kourtidis: (30:17)
Well, I'm going to the thing that people do where I changed your question a little because the thing I had in my mind was, response to what, Sam was saying. So, okay. I'm going to give everybody the slightly nerdier version because I'm a software developer. People talk about AI, but they really kind of often they mean automation, just AI sounds better. But I think that it you think about the value chain, whatever, I'm not an MBA, but probably sounds right. So you have basically like planning and all these things that Andrew was talking about. And at the bottom, you may have something like, okay, let's go implement this portfolio. You know, my company happens to focus on the bottom, but automation is basically, you can think of AI and calculations as kind of like two pieces. Like AI is good for things with patterns, the things like portfolio optimization, like we use other approaches for, for solving our problems, whether or not AI. So I feel like AI will be very useful for like all these high level things. Whereas Andrew said, it's difficult to handle all these special cases that are really about detecting patterns and saying, okay, we have like a little of this things that cannot fit in a calculation in an algorithm that's basically where AI tends to be good at.

Suzanne Siracuse: (31:25)
Yep, Great. So believe it or not. cuz, we have 30 minutes for these panels, I think we, packed a lot into 30 minutes. I wanna thank all three of you for taking time outta your day and sharing a little bit about where you see AI, affecting the wealth management industry and what you can do now and what the future looks like. So thank you all so much and thank you all for attending.