By Justin Whitehead for PWM, a Financial Times publication
When ChatGPT exploded into the public consciousness in late 2022, the prevailing assumption was simple: AI would disrupt everything. AI could reinvent software categories overnight. New entrants would dethrone incumbents. Start-ups that moved faster could knock off established players.
In wealth management, that prediction fuelled a wave of innovation unlike anything the industry had seen, from AI notetaking applications and prospecting tools to investment research platforms and planning assistants. The game, as they say, was on.
Three years later, the industry’s drama isn’t following the script. It has become clear that the future of AI in wealth management will not be determined by the most innovative start-up. It will be determined by the platforms advisers are already using every day.
That may sound counterintuitive for those who champion the “disruption” concept. Technology markets often reward challengers that build something better than what came before. The classic Silicon Valley mantra is to build a superior product and users will follow.
Wealth managers hate changing systems because, in large part, the data is a mess, which makes change risky.
Wealth management, however, operates differently. Rather than disruption, what is happening is more natural technological evolution. Financial advisers aren’t serial software switchers.
In fact, they hate changing systems because, in large part, the data is a mess, which makes change risky. Their businesses are built on trust, consistency, compliance and operational efficiency. Changing core technology introduces friction across every one of those things.
Committed to the core
Advisers usually remain committed to core systems for years, even decades, creating an environment where incumbents have ample time to respond to emerging trends. That reality changes the AI conversation entirely. Sure, start-ups can create a compelling AI tool. Even advisers themselves can create some tools using AI models.
But why make a commitment to switch if you don’t have to? Interestingly, AI notetakers took off because they were a new category, but as these tools expand into more traditional wealthtech segments, it is still to be determined whether they will find success.
Advisers increasingly want more from their software. Incumbent technology is not keeping up from either a productivity or cost standpoint. In this new and exciting AI era, advisers are finally seeing that they can, and indeed should, expect more from their technology.
They want their CRM to remember that last phone call. They want their financial planning tools to evolve past tedious forms. They want portfolio management and reporting systems to tell the story instead of print a number.
Most importantly, they want them available without creating another login, another subscription fee, another integration challenge, or another compliance review.
This is why recent announcements from established technology providers feel more consequential than many start-up launches.
Salesforce has introduced AI-powered capabilities into its financial services offering. RightCapital has incorporated AI-driven planning support. YCharts has launched its own adviser-focused AI functionality. Incumbent platforms are rapidly bringing AI inside the systems advisers already use every day.
Flash in the pan
That trend tells us something important about where adviser adoption is headed. The winners in adviser AI may not be the companies with the flashiest features. They may be the companies with the strongest distribution.
An adviser evaluating a standalone AI tool has to determine how it connects to existing workflows, where client data will reside, how information moves between systems, whether it creates additional cyber security concerns, and who will support it when something breaks.
When the exact same capability arrives from an existing technology provider, much of that complexity disappears. The AI functionality becomes part of the workflow they know and love rather than a new workflow.
That distinction matters. The average adviser already manages a growing tech stack. Every additional application introduces cost, training requirements, vendor management responsibilities, and integration risk. Advisers are looking for simplification.
For custodians, broker-dealers, and large technology platforms, AI represents an opportunity to strengthen existing platforms by working closely with strong start-ups that can strengthen incumbent technology. Firms that successfully integrate AI into the adviser experience can increase engagement, improve productivity, and deepen platform loyalty.
Different strokes
For fintech start-ups, the challenge becomes more nuanced. Innovation alone won’t cut it. The most successful AI companies will likely be those that either complement existing platforms or become essential infrastructure within them. Some will become acquisition targets. Others will power capabilities behind the scenes. Still others will evolve into category leaders because they solve problems incumbents cannot easily replicate.
But relatively few advisers will build entirely new technology ecosystems around emerging AI vendors. That’s just not how the wealth management industry works.
In wealth management, technology adoption rarely follows a “build it and they will come” model. More often, it follows a “bring it where advisers already are” model.
There is another implication that deserves attention. A lot of the discussions around AI focus on what advisers will do differently. The more important question may be what platforms will actually allow advisers to do differently.
Advisers may have access to AI-generated meeting preparation, automated workflow management, smarter planning analysis, real-time portfolio intelligence, proactive client communication support and predictive business insights. Yet those capabilities will only become mainstream when they’re delivered through the systems advisers trust to run their businesses.
That means the next chapter of AI adoption in wealth management belongs less to the independent application and more to the platform.
In wealth management, technology adoption rarely follows a “build it and they will come” model. More often, it follows a “bring it where advisers already are” model. The firms that understand that distinction will play the largest role in shaping how AI transforms advice over the next decade.
This article originally appeared in PWM.
