How financial advisors team up with AI to help investors


With the Dow Jones (^DJI) hitting record highs and potential interest rate cuts on the way in 2024, investors have been making their way back to the stock market. As the new year approaches, so do new strategies to tackle the stock market but, where to start?

Envestnet Chief Strategy Officer Rich Aneser joins Yahoo Finance to discuss what issues investors are most worried about and the role of financial advisors while entering the new digital age of AI.

Aneser breaks down how to implement AI in advising: “One component is how do they actually perform, the robo-advisers, in an absolute performance judgment. But when you add an individual adviser with the relationship they have with the client, you have a different outcome in terms of the performance… because there’s a lot of behavioral coaching that goes in. As the markets get real volatile and they have been moving around and we see that people have concerns about their financial future, the role of the adviser is to use AI to make smart decisions but to also be a coach for that client to stay in the market, stay out of the market, rebalance, take an action that they are both really comfortable achieving the goals that that investor wants.”

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

Investors have been piling into the market trying to capitalize on the recent momentum as the Dow stays hot, closing its ninth straight winning session. But questions about the Fed’s next move and a risk of a recession are worrying investors. A recent study from Envestnet found that 62% of Americans are worried about their financial future up from just 46% last year. So what does this tell us about the trends and the investment landscape for 2024?

According to Envestnet, demand for advice, it’s growing, and investor preferences are changing. So here to tell us more, we’ve got Rich Aneser, who is the chief strategy officer over at Envestnet. Rich, great to have you here with us this morning. What are the broader trends that you’re seeing and hearing right now from investors, and where that’s initiating some of the flows within this market?

RICH ANESER: Good morning. And thank you, Brad, for the opportunity. I would say there’s a couple of big trends that we are observing that are really important. The biggest one from investors and investor-led is the desire for a more holistic, fulsome advice, and that advice being highly personalized. And those are two key critical areas where investors and advisors are now working more closely together to create a better advice dynamic and better outcomes for the investor. And those two things, I think, are underpinned by AI, data intelligence, as well as integrated technology that can deliver that more holistic and personalized advice.

And Rich, we really saw AI be a buzzword throughout 2023. Now when you look at 2024, how do you think I will go into action for financial advisors, and how do you ultimately get investors on board to trust this new technology?

RICH ANESER: So I think, for the way we look at it is the way it supports a financial advisor is about making insights that help an advisor understand their book of business more clearly and what’s inside it with all of their investors. So we surface millions of insights a night to a financial advisor about tax loss harvesting, about better products and solutions for an individual investor. So that’s going to take a little time for everyone to get comfortable with it, but those insights are more powerful, helping advisor scale, and provide better advice to their investor.

You know, it’s really interesting. I mean, it feels like we’ve been talking about AI within advising, especially with the wave of robo advisors that really got initiated back in 2015, 2016, or thereabouts. When you think about the performance though that we’ve seen in environments like this, how have the robo advisors or the AI-driven advisors stacked up against someone who’s got perhaps a more active investing strategy or just tapping advisor?

RICH ANESER: So I think there’s a couple of things within that, Brad. And one component is how do they actually perform the robo advisors in an absolute performance judgment. But when you add an individual advisor with the relationship they have with their end client, you have a different outcome in terms of the performance, right? Because there’s a lot of behavioral coaching that goes in.

So as the markets get real volatile, and they’ve been moving around, and we see that people have concerns about their financial future, the role of the advisor is to use AI and intelligence to make smart decisions but to also be a coach of that client to stay in the market, stay out of the market, rebalance, take an action that they’re both really comfortable to achieve the goals that that investor wants.



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