How wealth managers are responding to the impact of AI

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Artificial intelligence has moved front and center for the wealth management industry. During recent quarterly earnings calls, firms including Goldman Sachs, Morgan Stanley and Citigroup outlined how they are deploying the technology and its impact on their bottom lines.

The potential use of AI in financial planning is rapidly evolving. Researchers from Case Western Reserve University and accounting automation solutions provider AIgency released a paper in April that evaluated the performance of five large language models (Google Gemini, ChatGPT-4, Claude, Mixtral and Llama-2b) on multiple-choice questions from CPA test preparation tools in an effort to assess their ability to “pass” the test.

Results were mixed. The paper concluded that ChatGPT is “the only real option for zero-shot BAR automation,” meaning that ChatGPT-4 could be used to help with automated financial statement preparation or additional forecasting. On the other hand, the researchers said Claude was probably better on auditing-related tasks, which the paper said “is a solid indication that it can be used for fraud detection and internal control validation.”

READ MORE: The AI gap: Clients and advisors feel very differently about artificial intelligence 

The idea of a large language model passing the CPA exam raises concerns for professionals: Am I eventually going to be replaced by a bot? 

A recent MIT study co-authored by Andrew Lo, a professor of finance at MIT Sloan and director of the MIT Laboratory for Financial Engineering, suggested that while these models have the potential to simulate certain behaviors of human advisors, there’s still a long way to go.

In fact, there may be more potential for job growth on the back end, after AI has created enough efficiencies to generate more assets, or clients, to manage. This means more human advisors will be needed, industry experts have suggested.

“It’s going to help the advisor, and it’s going to create efficiencies and process changes that will benefit the advisor,” Christopher Marsico, chief financial officer and a partner at Rossby Financial, recently told Financial Planning’s Rachel Witkowski. “And I can see where you get to a point where you’re going to need more people.”

READ MORE: Where are all the robo advisors?

Catch up on Financial Planning’s coverage of how wealth managers are responding to the growing relevance of AI in the industry.