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Our US correspondent delves into AI and its actual and potential uses in wealth management, banking and family offices. This is a rapidly evolving field, and we cover a range of important topics in this article.
Geoffrey Hinton, a computer scientist known as the “godfather of artificial intelligence,” recently 60 minutes He said he was very worried that AI would become smarter than humans and “may take over” the world.
Renowned futurist Ray Kurzweil has said that by the time children born today enter kindergarten, AI will likely surpass humans in “every cognitive task,” ushering in a new era of artificial general intelligence.
Now, in the meantime, a less scary, but still very practical and time-saving AI app is taking the financial advisory industry by storm: software that transcribes and summarises client meeting notes and inputs action items into CRM applications for execution.
According to Josh Brown, CEO of Ritholz Wealth Management, who moderated a recent panel discussion on AI hosted by the Museum of American Finance and Betterment, note-taking/action item apps are the most popular artificial intelligence “use case” among financial advisors to date.
“This is a massive scale-up proposition,” Brown said. Industry guru Michael Kitches, co-founder of XY Planning Network and publisher of the Kitches Report, said he “totally agrees” with Brown's assessment. In just a few months, using AI for meeting notes “has become an invaluable resource for us,” said Tony Blagrove, CEO of Traveca Wealth.
Inflow of venture capital funds
In fact, the phenomenon of AI note-taking/action item apps has really exploded in the last six months. The most popular apps, like Jump, Zocks, Grain, and Finmate AI, all use 2024 T3/Inside Information Advisor Software SurveyThe announcement was made at the T3 conference in Las Vegas in January.
Since then, dozens of startups have begun releasing AI note-taking apps, or “assistants,” and are attracting big venture capital investments.
Earlier this month, Jump announced a $4.6 million funding round led by Sorenson Ventures, with participation from Perion Venture Partners and several angel investors. In February, Zox raised $5.5 million in seed funding from Lightspeed Venture Partners, according to CEO Mark Gilbert, a former executive at San Francisco cloud communications company Twilio.
Typically, AI note-taking/action item assistant apps record client conversations, transcribe them, and create summaries, task lists, and compliance records. They can integrate with Zoom, Microsoft, Google, and CRM applications like Salesforce, Redtail, and Wealthbox.
Of course, each product has its own unique features, and XYPN recently posted an excellent description, ranking, and comparison of the top apps, listing their pros and cons and price ranges, with prices ranging from around $39 to over $100 per advisor per month.
Reduce post-meeting time by 70%
John O'Connell, CEO of technology consultancy Oasis Group, noted that financial advisors spend up to an hour after client meetings entering notes into a CRM, summarizing the meeting and creating action items for their team, and estimates that an AI note-taking app could save advisors up to 70 percent of that time.
Not surprisingly, advisers responded enthusiastically.
Mike Reynolds, president of Elevation Financial outside Indianapolis, said that after using Jump for the past four months after trying the AI note-taking app “quite a bit,” it has allowed him to “be more present in client meetings” without worrying about missing important things, resulting in a “better experience for clients.”
Katie Lindfeldt, a financial planner at Sequoia Wealth Advisors in San Jose, California, and a Zocks user, said the app was “super easy to get started with” and allowed team members “to clearly share notes and take appropriate action and follow up.”
While AI note-taking app Fathom wasn't designed specifically for financial advisory firms, Silicon Valley-based Blagrove likes that it works well with Salesforce and is a highly-regarded Zoom approved vendor. “The biggest value proposition is that we can document everything that was said and everything we did, which helps us demonstrate our value and justify our fees,” he said.
Data Security and Privacy Notice
Of course, there are some things to be careful about.
Apparently, most apps can't record phone conversations and require you to use a Zoom-type connection for virtual meetings, or a connection with a laptop computer or speakerphone for in-person meetings.
As with any AI product, human oversight is required to ensure accuracy, and the software's ability to clearly recognise and distinguish between individual voices may not be perfect.
However, data security and privacy are the biggest concerns so far.
“You're recording sensitive customer information,” Blagrove points out. “It's like inviting a stranger to a private meeting. You need to ensure the integrity and security of the data and validate the vendor's audited security policies.”
Before signing a contract, Blagrove recommends consulting firms obtain a Systems and Organizational Controls 2 (SOC 2) report, an independent assessment of a vendor's ability to securely manage client data issued by a CPA or another independent third-party auditor, a staple of Silicon Valley due diligence.
“Many software contracts favor the service provider when it comes to regulating data security and use of customer data,” O'Connell noted.
Cloud, Compliance, and Longevity
“Data needs to be protected in a private cloud,” said Joel Bruckenstein, president of T3, one of the financial industry's leading technology consultants, “but I'm concerned that small businesses may not be asking the right questions. If they don't fully understand how their data is being used, they shouldn't be using these apps.”
Indeed, O'Connell said Oasis has found that large consulting firms are not implementing AI apps “while they investigate the compliance and cybersecurity issues associated with these solutions.”
Bruckenstein noted that AI software is still a “very immature market,” comparing it to the robo-advisory market that emerged a decade ago: “Two-thirds of the robo-advisory companies no longer exist, having been disintermediated by incumbents,” he said.
