McKinsey & Company<\/a> says those focused on delivering outputs will see their businesses jeopardized by AI. Those focused on outcomes will do better.<\/p>\nThe report\u2019s authors lay out a pair of additional conclusions: AI will automate scenario planning and other document-heavy tasks. And the advisor role \u2014 to the extent it\u2019s focused on judgment and client coaching \u2014 will remain intact.<\/p>\n
\u201cFor years, the wealth management story has relied on three beliefs: that advice is constrained by the number of licensed professionals, that planning is labour-intensive and that trust and compliance create barriers to automation,\u201d the report reads. AI and robo-advice put each of those assumptions to the test.<\/p>\n
The AI opportunity for wealth management firm leaders is to automate the processes behind the advice, not the advice itself. Executives need to be clear-eyed about the difference.<\/p>\n
\u201cThere is no doubt that AI will aggressively assume specific tasks,\u201d according to the report. \u201cHowever, to say that AI will make the leap from automating tasks to replacing the job itself is a significant overstatement. Especially in the high-net-worth and ultra-high-net-worth segments, the true product is not the spreadsheet but accountable judgment and behavioural coaching.\u201d<\/p>\n
As specific services become undifferentiated from firm to firm, McKinsey says there will be intense pressure to lower prices. But, \u201cthe fear of an immediate, industry-wide fee-freefall is likely overstated.\u201d<\/p>\n
Client experience will win the day. Firms that deliver on rising expectations will continue to add value that robo-advisors and other digital-first providers can\u2019t.<\/p>\n
Investors are looking at all of this with keen interest, McKinsey reports. \u201cWealth management is now experiencing its version of SaaSpocalypse,\u201d the report reads. That\u2019s a reference to the beating software-as-a-service companies have taken as AI emerged as an existential threat to their business models.<\/p>\n
I asked Ju-Hon Kwek, a senior partner and global co-leader of the wealth and asset management practice at McKinsey in New York, if AI\u2019s impact will be the same north and south of the border.<\/p>\n
\u201cThe U.S. wealth management industry is more fragmented, more segmented and more independent-advisor driven,\u201d he said in an email. \u201cCanada\u2019s is more concentrated around major banks and their dealer networks. So, it\u2019s possible that these differences in industry structure translate into a faster, more uneven and more competitive AI rollout in the U.S., versus a more centralized and more institutionalized rollout in Canada.\u201d<\/p>\n
He anticipates more \u201ctop-down AI deployment\u201d here.<\/p>\n
Canadian wealth managers have maintained healthy valuations, thanks largely to robust equity markets. Scale remains the focus, and there\u2019s no reason to believe AI will dampen interest in merger-and-acquisition activity in the industry. On the contrary, it aligns with the ability of large organizations to invest in technology.<\/p>\n
While we\u2019re on the topic, here\u2019s our policy. We use AI tools, for research and editing primarily. There is a member of my team at the beginning and end of any process involving the technology. No AI slop here.<\/p>\n","protected":false},"excerpt":{"rendered":"The second covers what I call functional writing \u2014 media releases, white papers and the like. I expect…\n","protected":false},"author":2,"featured_media":538862,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,4174,4175,56,54,55],"class_list":{"0":"post-538861","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-personal-finance","11":"tag-personalfinance","12":"tag-uk","13":"tag-united-kingdom","14":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/538861","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=538861"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/538861\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/538862"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=538861"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=538861"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=538861"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}