After firms and technology vendors across wealth management have rushed to capitalize on the increasing buzz surrounding artificial technology, issues like privacy, bias and explainability will likely cause some to reverse course next year, according to a senior analyst at Forrester.
The consulting firm's research found that 45% of business and technology professionals in wealth management plan to adopt generative AI technology over the next 12 months.
For example, JPMorgan Chase is reportedly developing a ChatGPT-like software that can recommend investment products. Other wirehouses, broker-dealers and large RIAs are similarly looking at how the technology can be deployed.
However, despite the hype surrounding these technologies, they likely won't yet be ready to deliver objective advice in 2024, said Vijay Raghavan, a senior analyst at Forrester focused on private banking and wealth and asset management.
More work is needed on "explainable AI" that can demonstrate how any advice provided is in a client's best interest, he said.
"It's all risk management, right? These guys just can't be putting out something that will be [delivering] hallucinations to the retail customer," Raghavan said, referring to the phenomenon of AI generating output that is nonsensical or inaccurate. "It's just too risky."
That's not to say the technology doesn't have commercial potential in wealth management. Forward-thinking firms will develop explainable AI that works internally before bringing it to consumers, Raghavan said.
For example, Morgan Stanley has been training the GPT4 engine on its own internal information, rather than on what's found more broadly on the internet, for a back-office chatbot that assists advisors and their staff.
