Wealth Management

Transforming Wealth Management with AI

Wealth Management is undergoing rapid transformation as trillions of dollars of wealth transfers hands from baby boomers to the next generation.

In the coming years, roughly $30 trillion in financial and non-financial assets will pass from baby boomers to their children in North America alone. Historically, over 90% of heirs have changed their advisors when the wealth is transferred to them, presenting both an opportunity and a major threat to traditional wealth management firms and their advisors.

A second but equally important threat is coming from robo advisors and fintechs. Robo advisors are luring clients across the board but especially those with fewer financial assets. This erodes future sources of clients and revenue.

To ride on this opportunity and minimize customer and financial advisor (FA) attrition, wealth management firms must fully equip their FAs to meet the demands of these “next-gen” investors whose expectations and preferences have been shaped by new technologies.

While clients demand a personalized experience, wealth managers must invest a significant amount of time to manually derive insights into the changing status and needs of their clients. Wealth managers simply cannot provide this level of personalization at scale, given their time constraints.

As a result, their clients often navigate large financial events and decisions by themselves. Left on their own to sift through mountains of data, clients may be tempted to make transactions that are mismatched to their overall needs and goals. While a frustrating client experience engenders little loyalty to financial services firms, augmenting wealth managers with financial industry-specific artificial intelligence (AI) tools fills the gap between the experience demanded by the clients and what is currently provided to them creating a win-win solution for both parties.

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Wealth Management AI Benefits


Know Your Clients

Using AI in wealth management helps FAs better under-stand their clients and provide an enhanced portfolio construction beyond merely organizing investors into “aggressive, conservative, or balanced” boxes. More specifically, AI derives relevant social signals that give advisors insight into their clients’ current and potential financial needs. For example, AI can be used to tailor investment advice based on social signals indicating major life events, such as the birth of a child or retirement.


Personalize Engagement

More than ever before, clients are demanding personalized service. But, personalized recommendations are only part of the answer. Clients have specific preferences in the way they want to be served and in how they communicate with their advisors. Wealth management AI systems can track which forms of communication (mail, email, phone calls, texts) are most effective at engaging the client and in delighting them. It can also learn what frequency of communication is most appreciated by clients.


Scale Your Advisors

AI recognizes occasions in which an advisor would typically contact a client, such as a change in the portfolio, a change of address, wishing clients’ birthday or birth of a child. In most cases, the AI can be configured to automatically contact clients to address the issue. Wealth management AI tools provide advisors with client dashboards that are interactive and contain actionable insights and information on the client’s portfolio, including performance against benchmarks. This helps advisors save much of the time that was previously spent on mundane tasks.


Enrich Your Insights

Beyond generic research, bankers and their clients are demanding access to quantamental analysis which uses AI to tap into the power of both quantitative and fundamental investment analysis. Quantamental analysis relies on the ability to ingest very large historical data sets and compare that to current market signals. This data-centric and algorithmic approach analyzes vast amounts of structured and unstructured financial and market data, applying machine learning (ML), natural language processing (NLP) and other technologies to search, navigate, set alerts, analyze filings, news, and other disclosures for critical data that drives intelligent wealth management advice.


Ensure Your Compliance

With the increasing regulatory pressures (as banks prepare for MiFiD II), and intensified competition, FAs face the most complex problem of attaining optimized investment returns while remaining in compliance. As AI-driven algorithms provide ever more insightful content and timing to financial advisors, it is essential that those recommendations fall within the bounds of internal policies and external regulatory compliance. Keeping financial insights within the guardrails of compliance requires the ability to quickly apply the right policy constraint in the right context. Sorting through this complex web of constraints, and doing so at the speed required by clients and their financial advisors, requires AI-powered compliance management.


Learn Continuously

Whether the task is to know clients better, serve and communicate with them more effectively, scale advisory services, provide quantamental analysis, or ensure compliance, AI’s ability to continuously learn is a powerful force for wealth managers. Wealth Management AI systems provide insights and recommendations that are backed by evidence to the ML based system learns from this feedback, and improves its performance as it sharpens its insights.

Important Underlying AI Technologies from CognitiveScale

Wealth Management AI Technologies

Hyper-Personalization, Evidence & Explainability:

CognitiveScale’s Profile-of-One AI for Wealth Managers tailors insights and experiences based on observed, declared, and inferred data to drive rich client engagement and actions. The data collected to build this profile can be combined through multiple data sets, derived through past behavior, application feedback, and app analytics, or derived through natural language processing to pull out critical traits to help understand additional client profile attributes. And explainable AI ensures transparency into the system’s rationale. CognitiveScale not only provides AI-powered recommendations to Wealth Managers, but it also explains the reasons why it is recommending something; essential for audits and regulatory oversight.

Quantamental Decision-Making:

Quantamental analysis includes elements of traditional fundamental analysis as well as compute-heavy quantitative analysis. Machine learning (ML), natural language processing (NLP) and other AI techniques are used to accelerate and automate the creation of timely insights that are derived from vast historical and real-time financial data.

Learning and Continuous Feedback:

Continuous learning allows the Wealth Management AI application to appreciate in value as user feedback, market data, and transactional data are updated. To enable continuous learning, CognitiveScale provides consistent frameworks and utilities to collect user feedback and additional training data to foster incremental learning.

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CognitiveScale’s Wealth Management AI Solution: Client Advisory Insights

CognitiveScale delivers proactive, individualized Profile-of-One service for clients and contextualized 360-degree view of clients and recommendations for their advisors. The Wealth Management AI Solution empowers financial advisors to measurably improve how they guide their clients through their financial journeys. Its Profile-of-One delivers individualized client insights to FAs and wealth managers to drive the conversations that drive customer loyalty.

To improve financial advisors’ understanding of all their customer needs, the solution curates major triggers and catalysts that impact their clients’ lives. These include traditional financial planning inputs like current portfolios, allocations, transactions, and sector preferences. They also use AI to uncover the client’s financial personality and to infer clients’ unstated preferences. By using these triggers, the system generates individualized insights along with recommendations, supported by evidence to the wealth manager. These insights help wealth managers to scale their customized service to multiple existing and new clients in a way that would not be possible without AI. These insights are integrated into financial advisors’ existing software infrastructure and workflows.

This highly-personalized, but automated service, also helps firms to improve customer retention, lower cost to serve, and increase wallet share.


Helps anticipate & accommodate life events

Increases engagement, conversion, & loyalty

Shares insights proactively & automatically shares with evidence & user feedback

CognitiveScale’s Wealth Management AI Solution: Profile-of-One

Additional AI Use Cases for Wealth Manager Advantage

In addition to providing insights and recommendations to financial advisors for client service, AI from CognitiveScale can be used to fundamentally remake the wealth management firm. Here are just a few examples:

Next Best Action

Inform the advisor of the next best action based on a known domain. This essentially forms a decision support system for the advisor to enable customer servicing.

Customer Complaint Prevention

Run pattern identification over a range of customer interactions to determine the propensity of a customer to complain.

Predictive Prospecting From Market Conditions

Shortlist prospective clients and the right channel of communication.

Customer Intelligence Gathering

Gather data on customers’ behavior to better understand their personality and needs. Using this data, we create a unique client profile which serves as a strong base for advisor interactions.

Customer Guidance/Advice Insights Assurance

Advisor contacts the customer and aggregates information, pulling in additional data from public/private sources and creates the Profile-Of-One. The system provides financial advisors with guidance on optimal products/services for the customer.

Match Advisor to Customer

Match customers to advisors based on a range of observed behaviors and inferred personality traits. This approach creates huge impacts on customer relationships (story telling vs. short, sharp, direct, and to-the-point).

Embrace Change or Wait and See?

Having already been through previous waves of technological change and democratization of information in the past few decades, the Wealth Management industry is experiencing an entirely new game-changer: AI. Once they become aware of the value that Artificial Intelligence is providing their friends and colleagues, financial advisory clients will demand similar levels of service and performance from their own financial advisor. Some firms will embrace change now. Others will scramble to catch up with today’s early adopters. Still others will take a “wait and see” stance.

Either way, change is coming. The good news is that AI is now past the “bleeding edge” stage, and firms can benefit from the experience of previous financial industry AI pioneers. For wealth managers, CognitiveScale offers a full portfolio of financial services AI offerings as well as a proven, repeatable methodology to ensure their successful implementation.

Next Steps

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