Firms like Morgan Stanley are experimenting with how Artificial Intelligence can be used to improve the management of clients’ money. Morgan Stanley and other big Wall Street firms such as robo-advisers and start-ups, are learning how data mining, algorithms and natural-language processing can help their clients generate more wealth.

Next Best Action, Morgan Stanley official initiative, was released earlier this year for over 15,000 financial advisers. And over 20,000 employees, including firm’s service workers, have access to these tools. The technology evaluates interactions with users by text, emails and other notes. Then, it applies machine learning to judge other products that can be recommended to the users.

Morgan Stanley Wealth Management’s chief analytics and data officer, Jeff McMillan, said:

“The machine serves up those ideas to the financial adviser, and then they decide what makes sense based on their practice and the needs of the clients,”

Using the natural-language technology, wealth management users can get more quick replies through mobile websites, apps or speech commands for regular requests, for example, to reallocate the portfolio or for stock selling.

Ram Menon, CEO of Avaamo, said:

“While there is a lot of talk about AI is going to change the world, and it is, a lot of the changes that are happening in the wealth management, retirement-planning market is tangible, is practical and is just making the whole velocity of interactions more efficient”

Path, an attribute that has been launched by robo-adviser Wealthfront, utilizes machine learning techniques and third-party data to answer user’s queries related to retirement plans.

Wealthfront Financial Planning

“If you tell [Path] that you’re going to buy that $1.3 million condo in the East Village in five years, it can actually tell you, ‘That’s great. If you want to do that, it looks like you might have to retire a couple of years later or you could just save more,” Kate Wauck, Vice President of communications at Wealthfront, said. “It’s not siloed advice. This is the power of automation.”

At Morgan Stanley, adviser prompts are for helping them enhance their work – not to  replace it.

“The most powerful driver of client satisfaction are in-person meetings and phone calls with our clients,” McMillan said.

According to McMillan, the firm’s technology solves two problems:

  • It gives more time to financial advisers to make deeper conversations.
  • It allows them to quickly contact more people.

Other firms have given examples where users are preferring automation over human communication. Avaamo in collaboration with a firm in Asia deployed virtual assistant and that is how Menon described user’s feedback: “The feedback was, ‘Hey, we like the virtual assistant because it doesn’t lie. It’s not trying to sell me something. It’s very factual,”

Another robo-adviser, Betterment, is using AI for back-office tasks such as check processing. However, financial advisers are not sure yet where the technology will take them.

“When it comes to personality issues and the soft side of money, the algorithms, the AI, is nowhere near ready yet to be able to help you deal with the complexities and nuances of personal finance decisions,” Ric Edelman, financial adviser, said.

But he believes that it can change in the coming 10, 20 or 30 years.