An interview with April Rudin, Founder & CEO of The Rudin Group.

Q1: Given that wealth management is very unique and has its own special elements as a financial service, do you think AI technology will affect that uniqueness or exclusivity of the service or expand it further to another dimension? And a second more trivial question, as wealth management is highly associated with the physical human presence do you see any real downturns on the experience path as in principle this was considered to be a traditional high-end service offering. 

While it is true wealth management has always been a “relationship” business, it is naïve to think that there is not a technology advantage for both firms and their clients. This attitude has accounted for the slow adoption of fintech and wealth-tech products for wealth management firms. Their clients have pushed hard for innovation and the firms have relented.

Technology is a fundamental way to differentiate your offering and your firm in a compelling way. There are solutions for improving the CX and onboarding process, reporting process, etc. And wealth management professionals can be relieved of the tedious work that fintech can help make smooth. This gives them more time to spend on business development and clients = a “win-win” value proposition. 

Q2: Given your engagement with this very niche market, we want to hear from you what you think about the use of AI and Machine Learning in wealth management and asset selection. Is this something you see changing the market rapidly and how close are we to seeing a fully machine-based operation without any physical human interference? Are people from one side ready to accept such a change (perception and ethics-wise) and do machines have the capacity to predict the unforeseen, the event that does not follow any logical patterns?

With the average age of a financial advisor 55 years old and a lack of enough talent, there is a significant opportunity to train the machine, i.e. artificial intelligence and machine-based learning that can “fill-in” for some of the tasks that were formerly done by humans. Newly-minted nex-gen advisors can benefit from the knowledge and experience of more seasoned advisors if they have access to AI and machine-based learning models.

Q3: Summing up, and after getting all these useful and valuable insights, I am curious, do we really make things happen by reinventing the wheel? (introducing something new). Or what we really do, is “wax and polish” traditional concepts under a digital, tech-oriented format?

This is the question of “digitization” vs “digitalization” – in the former, it is merely “automating” an existing process which is usually not useful at all. On the other hand, digitalization involves rethinking systems and processes to best utilize technology. 

Q4: Personal relationship and engagement are always good when returns are negative. How do you see technology addressing this lack of human interactivity element for unpleasant or unwanted investment situations?

I think that there will always be a human element needed for investments – whether good or bad returns. You see that the large robo-advisors are adding humans and human firms are adding digital capabilities. A chatbot cannot explain nor comfort a client who has a need to understand or wants more comfort when an investment might go wrong. I have yet to see a chatbot provide much empathy no matter how AI-driven it may be. In my opinion, there will always be a place for humans in wealth management.

Q5: As a closure what is your personal feeling, in the current market do we see disruptive applications that change the nature of business (new activities, new applications) or just a better digital based model of traditional activities and services?

We are basically at the first inning of disruptive applications and ideas with most activities being “digitized vs digitalized.” As the talent pool grows, and digital natives make their way into the workforce, there will be a huge uptick in the way business is conducted as this new workforce is not bound by the same mentality as previous generations. I am looking forward to seeing how much things change!