Wealth 2.0: Robots, Hybrids, and AI, OH MY!

Digital Transformation is here.

It was a pleasure to attend the inaugural Wealth 2.0 conference in Canary Wharf, London, UK last week. The two-day event brought together industry leaders from some of the top wealth management firms including Barclays, BNP Paribas, Schroeders, Northern Trust, Rabobank and many more as well as robos like Wealthsimple, Nutmeg and PensionBee. Of course, innovators like NexJ such as SwissQuant and Addativ were there too.

I have to say, most of the other innovators were focused on portfolio or fund construction/management. As far as I could tell, we were the only ones with a specifically customer-focused fintech perspective. The purpose was three-fold: assess the current state of innovation and technology, chart the course for where we think the industry is going, and discuss what we should do because of it.

Day one focused on digital transformation, and customer engagement. Day two focused on artificial intelligence. Two tracks were provided for some of the content each day, one with a robo-advisory focus and one with a traditional wealth & asset management focus. Some parties floated between the two, but I mostly stuck with the traditional track.

On day one, I had the privilege of hosting a roundtable session on what turned out to be a popular topic, hybrid advice. It was a lively and engaging discussion. Some of the participants were from robos, many from banks and big firms, and some from other walks like financial planning. So, debate was a guarantee.

As I always do, I started with having the table define hybrid advice. As expected, what one might have assumed to be an easy opener led to disagreement. Many thought of it as an upgrade from the traditional advisory model, with the advisor instead using robo to manage the investments and provide digital capabilities for the customer to self-serve. Others thought of it as a primarily digital advice model that allowed for the injection of “advice moments” where customers could engage with a human advisor as they wanted. What we could eventually agree on, is that it’s a spectrum: hybrid isn’t one model.

We argued over what the role of the advisor was. Most seem to agree that Artificial Intelligence (AI) will quickly (if it hasn’t already) reached the point where it will do any “logical” or “deterministic” activities better than a human. This left the advisor to really focus on helping provide context to decisions, place a greater emphasis on financial planning and coaching – subjective activities that require a high degree of empathy (something we all felt AI was not going to be capable of any time soon). Therefore, helping advisors better understand customers and arming them with the insight to personalize advice. The purpose being to scale the service offering.

On day two, I was part of a panel discussing AI and what it could do for the wealth management industry. Funny enough, we all had different ways of explaining AI. What is weak AI vs strong AI? What is machine learning? Deep learning? What are neural networks? What is the difference between supervised learning vs unsupervised learning? What are the right Bayesian algorithms for data analytics? Clearly, the business doesn’t really understand what AI is exactly – but to be fair, they don’t really need to.

I broke it down to 2 concepts from a business perspective: 1) automation, and 2) insight/intelligence/cognition. There was certainly a lot that could be done from an investment modelling, fund creation/management perspective. There was a lot from a business process perspective, like onboarding and KYC. But there was also the insight angle. Using the data that firms are rich in (and they’re richer than they think), we can actually learn a lot about a customer. We can understand what kind of investor they are and what their personality and communication style likely are. Turning that into prescriptive analytics, we can help the advisor understand how to talk to their customers in a way that will deliver the right outcomes.

I could go on and on about some of the really great presentations I heard. Great insights on what the banks are doing from a digital perspective, where robos are going, and the completely different views between regions (North America, vs UK/EU, vs Asia for example). Sufficed to say, I learned a lot as well and want to thank all the other presenters for their insights.

Throughout the course of the conference, I was able to connect with many delegates and we had some great conversations on a lot of these topics. I look forward to continuing those discussions. If we didn’t get a chance to connect while I was there, or there’s a topic here of interest, please feel free to reach out and I’ll be happy to discuss with you.