The Innovation and Issues that RIAs, Fee-Based Advisors and Investors Care About Most
Nationwide has released its 2018 Advisor Authority, the seminal study on important trends impacting the advisory channel today. We present here excerpts from the study, with comments from Craig Hawley, Head of Nationwide Advisory Services. Read the entire study here.
Markets are moving faster and the world around us is becoming increasingly complex. Innovation continues at an unprecedented pace, driven by regulatory changes, the power of consumer demand, the digital economy and advances in technology. The race is on—and technology allows all of us to stay one step ahead. As it becomes more efficient, integrated and intuitive, technology is helping create new categories of products and services that never existed, expanding access in ways that were never expected, providing greater transparency and simplicity—and driving down costs to unprecedented lows. There is no technology that has done more to captivate the industry’s imagination—at the same time that it heightens the anxieties of advisors and investors alike—quite like Artificial Intelligence.
AI continues to dominate the headlines— especially as the debate around online privacy continues to intensify and the impact of trading personal data for convenience comes into question. Once the domain of large institutions with deep pockets, Artificial Intelligence has been known for its use by industry leaders like Amazon, Apple and Google to gain insight into consumer behavior, and by top portfolio managers and hedge funds to gain an edge over the market. More recently, AI is being adopted by RIAs and fee-based advisors to enhance the human connection with clients—and to gain an edge over the competition—by transforming every aspect of the customer experience, from the front-end to the back office and opening the door to an entirely new universe of products and solutions.
The AI Divide
Today, you can use Artificial Intelligence to help evaluate complex problems, make more accurate predictions and arrive at decisions with a greater degree of certainty and success. AI can quickly assess and organize complex information and big data from disparate sources to efficiently identify patterns and trends, by employing refined algorithms, predictive analytics, natural language processing, speech recognition, image recognition and other advances in machine learning. And ultimately, AI is only as good as the data that is feeding it—and more importantly, the human that is interpreting it. In this Advisor Authority Special Report, we help RIAs and fee-based advisors like you to prepare for the rise of AI. We help explain how to harness the benefits of Artificial Intelligence to create a competitive advantage for your practice, enhance current profitability and build a foundation for the future growth of your firm. We reveal how AI helps you improve the advisor/investor relationship with current clients—and expand your offerings to attract a new category of client you’ve never served before. We also discuss how you have a unique opportunity to help clients navigate the unknowns, understand the benefits and bridge the “AI Divide.”
To help all advisors at every level tap into the tremendous potential of the independent fee-based channel, our 2018 Advisor Authority study, now in its fourth year, will provide you with an ongoing series of Special Reports in the months ahead, exploring the many issues and innovative solutions that matter most to RIAs, fee-based advisors and their clients. Conducted for us by The Harris Poll, Advisor Authority surveys more than 750 RIAs and fee-based advisors nationwide, including Highly Successful Advisors who are setting the trends in our industry, as well as over 800 individual investors, from the Mass Affluent to the Ultra High Net Worth. Nationwide Advisory Solutions got its start as Jefferson National, a company built from the ground up with a singular focus on serving RIAs and fee-based advisors. We believe in the tremendous potential of the fee-based channel to drive new innovation, disrupt the status quo and transform the future of our industry. We have never stopped in our efforts to develop a deeper understanding of the challenges you face—and the solutions that you need to succeed. We will continue taking the pulse of RIAs, fee-based advisors and their clients, to establish benchmarks and provide you with the actionable insights that are so important for your success.
of Special Reports.
How to use this report
To help you recognize unseen opportunities and learn from industry innovators, in this Advisor Authority Special Report we focus on the early adopters of Artificial Intelligence (AI). Early adopters are a subgroup of a broad set of financial advisors (including RIA, Fee-Based, Broker Dealer and Wirehouse) who are familiar with AI and currently use AI in their advisory practice. These early adopters, when compared to the RIAs and fee-based advisors in our study, are far more likely to say their profitability will increase substantially in 2018 (37% vs 22%)—and more likely to say their financial outlook for 2018 is very optimistic (34% vs 26%).
Early adopters are also more likely than RIAs and fee-based advisors to be Millennials (58% vs 45%). They are more likely to be among the categories of High AUM Advisors who manage over $250 million (15% vs 11%) and High Earning Advisors with income of more than $500,000 (16% vs 11%). They are more likely to be active managers (85% vs 78%) and to have a dedicated in-house team for investment management (57% vs 42%). The ways that they think about and utilize AI will be explored in depth throughout this Special Report.
The Rise of AI: Harness the Benefits of Artificial Intelligence
Technology has become more efficient, integrated and intuitive, helping create new categories of products and services that never existed, expanding access in ways that were never expected, providing greater transparency and simplicity— and driving down costs to unprecedented lows. And there is no technology that has done more to captivate the industry’s imagination—at the same time that it heightens the anxieties of advisors and investors alike—quite like Artificial Intelligence.
What is Artificial Intelligence?
Artificial Intelligence was essentially born in 1956, when academics met at Dartmouth College to discuss the new premise of “thinking machines.” In the ensuing years, its applications proved as diverse as IBM’s Deep Blue, which defeated world chess champion Gary Kasparov in 1997, to Carnegie Mellon’s Libratus, which beat top champions in a 20-day tournament of no-limit Texas Hold ‘Em in 2017, to the most recent advances in self driving cars and other autonomous devices that we are seeing today.
Artificial Intelligence uses advances in machine learning to help you evaluate complex problems, make more accurate predictions and arrive at decisions with a greater degree of certainty and success. AI can quickly assess and organize complex information and big data from disparate sources, to efficiently identify patterns and trends by employing refined algorithms, predictive analytics, natural language processing, speech recognition, image recognition and related capabilities. But ultimately, AI is only as good as the data that is feeding it—and more importantly, the human that is interpreting it. Every time a client interacts with your website, enters your client portal, reads your blog posts or replies to your emails, Artificial Intelligence can help you to learn more about their needs and help you understand what matters most, to put them at the center of everything you do. In this way, AI can help you perfect your current customer experience—or pivot and shift—to personalize the experience for each individual client.
Likewise, AI is a powerful tool to attract and retain a new category of client you’ve never served before. Artificial Intelligence helps you develop a better understanding of unknown prospects and rapidly make more informed decisions for results oriented marketing. It can expand your service offering in new ways, whether providing a simple low-cost Robo experience to keep fees in check, or more sophisticated holistic planning solutions, to bring services such as estate planning, tax planning and insurance in-house. Artificial Intelligence also reduces the amount of time and money spent on more routine commoditized tasks, such as basic portfolio management, so that you can focus on “the 20 percent of non-routine tasks that drive 80 percent of value creation.” AI not only creates more time for you to meet face-to-face and one-on-one with your clients—it also allows you to enhance the quality of these meetings.
Prepare for the rise of AI. Understand how to harness the benefits of Artificial Intelligence so you can create a competitive advantage for your practice, enhance current profitability, better serve your clients and build a foundation for the future growth of your firm.
Read the entire report here.
