AI, ChatGPT, and wealth management

The chances are you’ve heard of ChatGPT. It’s one of the ways in which artificial intelligence (AI) is changing the way we live, work, travel, spend – and spend our free time. It’s also very likely to change the way in which your money is invested and how you interact with those who help you invest it.

The future started last year

It seems hard to believe ChatGPT arrived just a year ago.

Of course, most people knew something about artificial intelligence before 30 November 2022 – but this new generative AI chatbot caused a sensation.

Schools and universities scrambled to work out how to stop AI-driven cheating, while risk-conscious financial institutions rapidly developed their own AI tools[1] – as did Google (with Bard) and Apple (Bing Chat).

It wasn’t long before Elon Musk, Steve Wozniak, Yuval Noah Harari and thousands of other luminaries signed a letter asserting that, “Advanced AI could represent a profound change in the history of life on Earth, and should be planned for and managed with commensurate care and resources[2].”

A silent revolution

ChatGPT is of course just one of the more visible applications of AI. In reality, it’s starting to appear almost everywhere: smartphones, cars, customer services, retail experiences … the list goes on.

Researchers at McKinsey looked at 63 use cases in business for generative AI alone – and calculated they could add the equivalent of $2.6 trillion to $4.4 trillion annually to the global economy. By comparison, the U.K.’s GDP in 2021 was $3.1 trillion[3].

They also looked specifically at how AI might change the business of wealth management in the vast and growing Asian market. They found that between 34% and 43% of clients would be happy to receive financial advice digitally[4].

AI and your wealth manager

Brits are a bit more sceptical.

A recent survey by Simplify Consulting[5] asked wealth management clients if they like using chatbots – and some 95% responded to say they don’t like them. Perhaps, like me, you’re now wondering about the 5% that do like them!

But today’s chatbots might soon appear crude and unsophisticated. This is because financial institutions are now thinking about generative AI systems that can respond to complex requests and specific customer needs. This is what one management consultancy has dubbed “conversational finance”[6].

Most of the discussions around AI in wealth management focus on two areas: a better experience for clients, and improved efficiencies for providers.

In other words: automate more mundane lower value tasks; humanise the more complex and higher value activities. Checking your account valuation or asset allocation? That’s more likely to be an AI thing in future. Discussing the implications of a financial affairs power of attorney? Definitely one for an experienced human.

What no-one seems to be talking about is having machines make decisions about your money, such as where and how it is invested. In any case, the GDPR rules offer safeguards here[7].

AI and your investments

McKinsey’s predictions about the economic boost offered by AI are one of many.

For example, the American bank Goldman Sachs says AI could raise global GDP by 7%[8]. They go on to point out that, while AI will likely sweep away many jobs and roles, it will act as a catalyst for new roles, many of which do not currently exist.

It is the technology companies likely to benefit from wider adoption of AI. They already represent over a quarter of the U.S. stock market[9]. When this market goes up (or down), so will any fund tracking it.

The giant firms need no introduction: Meta, Apple, Google, Amazon, Netflix.

But some others might. Here are three examples from American stock markets.

Symbiotic is a robotics warehouse automation company – sorting packages faster and more effectively[10]. C3 AI is an enterprise AI company – with one recent project focused on more efficient sugar harvesting[11]. Helix is an energy group with a significant robotics franchise – with a product line in machines that tackle deep sea debris around offshore renewable energy installations[12].

I mention these not because we have any insight into their future share prices. No one does.

But they all represent ways in which AI is changing the world and the companies your money is invested in. AI may the way you might engage with companies like ours in the years to come.

[1] https://www.fnlondon.com/articles/schroders-ceo-peter-harrison-chatgpt-ai-blockchain-20230731

[2] https://futureoflife.org/open-letter/pause-giant-ai-experiments/

[3] https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-economic-potential-of-generative-AI-the-next-productivity-frontier#/

[4] https://www.mckinsey.com/industries/financial-services/our-insights/digital-and-ai-enabled-wealth-management-the-big-potential-in-asia#/

[5] https://www.simplifyconsulting.co.uk/wp-content/uploads/2023/09/WhitePaper-v2-Full-Version.pdf

[6] https://www.ft.com/content/da0f4df3-72bd-481d-a3c1-222a406e7ba2

[7] https://www.linklaters.com/en/insights/blogs/digilinks/ai-and-the-gdpr-regulating-the-minds-of-machines#:~:text=Transparency%20and%20“explainability”,to%20tell%20them%20about%20it.

[8] https://www.goldmansachs.com/intelligence/pages/generative-ai-could-raise-global-gdp-by-7-percent.html

[9] https://www.usbank.com/investing/financial-perspectives/market-news/investing-in-tech-stocks.html#:~:text=Information%20technology%20stocks%20currently%20represent,27.5%25%20of%20the%20index%27s%20value.

[10] https://www.symbotic.com/innovation-insights/

[11] https://c3.ai/pantaleon-and-c3-ai-modernize-sugar-harvesting-with-ai-leading-industry-innovation/

[12] https://helixesg.com/our-assets/helix-irov-subsea-intervention-tool

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.