In late 2023, LSEG sponsored detailed research to better understand changing preferences and emerging trends within the wealth industry.
The firm writes that it asked investors across the globe about how changes in the wealth industry are impacting them.
Key findings reported by LSEG and Thoughtlab are:
Providers agree that AI will change the way they operate
A substantial 69 per cent of providers agree that “AI will significantly change the way my firm works”.
Furthermore, almost all identify themselves at advanced (48 per cent) or mid-implementation (44 per cent) for AI automation.
Just 8 per cent are at the early implementation stages and 1 per cent are at the planning stage.
Respondents are willing or somewhat willing to harness AI
Respondents were asked if they would be willing or somewhat willing to use AI-enabled processes for a range of tasks. Across all regions, respondents were:
Most likely to use AI to research products and services, with 91 per cent in EMEA, 92 per cent in North America and 95 per cent in APAC saying they were willing or somewhat willing to do so.
Least willing to use AI-enabled processes to manage their investment portfolios directly, with percentages dropping to 43 per cent, 53 per cent and 43 per cent respectively.
AI does not appear to be a reality for several areas of work – yet
When asked about the areas in which their firm has already implemented AI use cases, under half of respondents had done so across all areas of work listed. Some examples of the areas listed include, but are not limited to, investment advisory, investment research, financial planning and fraud detection.
Implementation is highest in investment research (46 per cent) and investment advisory (44 per cent).
Firms are more confident they will be implementing AI across several key areas in the next 3 years – half or more of firms expect to implement AI for financial planning (50 per cent), investment research (51 per cent) and investment advisory (56 per cent) within three years.
North American investors appear more open to handling activities through AI
AI is still far from the preferred approach for many activities, but those in North America are significantly more likely to prefer this approach in activities such as:
Researching products and services (29 per cent, as compared to 13 per cent in APAC and 14 per cent in EMEA)
Portfolio rebalancing (23 per cent as compared to 12 per cent in APAC and 14 per cent in EMEA).
There appears to be agreement that AI will reshape the investment landscape, but regional differences are apparent
North American investors are significantly less likely to invest through big brand retailers or tech companies than those in other regions, with 45 per cent in the region saying they would do so, as opposed to 53 per cent in EMEA and 54 per cent in APAC.
North American investors are also significantly less likely than others to stop using an investment advisor by 2030 because of advances in tech (48 per cent compared to 57 per cent in EMEA and 56 per cent in APAC).
Drilling down
These findings confirm that AI is indeed shaping the investment landscape – and will continue to do so with greater momentum into the future. With a substantial 69 per cent of providers of the opinion that AI will significantly change the way their firm works, it is evident that a sea change is underway. Not only this, but the vast majority are moving forward with AI implementation. Very few are lagging.
This is supported by a general willingness to incorporate AI into the investment process – but trust in technology does not yet extend to all areas of the investment process. Whilst many respondents are comfortable with AI-enabled research into products and services, the percentages in favour drop significantly when it comes to managing investment portfolios directly.
This suggests that trust in technology still has some way to go and that investors still largely value human input into the decision-making involved in managing a portfolio. This supports our view that a hybrid digital and advice model will gain traction going forward.
While in certain areas, the implementation of AI is lagging, many are confident that they will be implementing it across several key areas in the next 3 years, suggesting continued momentum in the adoption of AI within the wealth industry.
Regional differences are apparent, with investors in North America holding different views to those in APAC and EMEA in several key areas.
Interestingly, the authors writes that although those in North America are significantly more likely to prefer AI in certain investment activities than those in other areas, they are also much less likely to stop using an investment advisor because of advances in tech.
Once again, this suggests support for a hybrid investment model, and underscores the fact that the new normal in investments holds ample space – and opportunity – for both advisers and those catering to the self-directed market, the authors say.
