Artificial intelligence in spotlight at Schwab IMPACT 2023® conference

Artificial intelligence was top of mind at Charles Schwab’s IMPACT 2023® conference for independent financial advisors last week in Philadelphia.

AI will play a major role for advisors with “far-reaching implications” for the industry’s future, Schwab’s COO for Advisor Services, Jon Beatty, told 2,500 advisors at the conference’s keynote address.

The AI theme was amplified the following day by three executives. 

Speaking on a panel discussing “Balancing the risks and rewards of generative artificial intelligence,” both Raj Madan, AdvisorEngine chief information and technology officer, and Matt Moberg, senior vice president and portfolio manager at Franklin Templeton's Franklin Equity Group, said that artificial intelligence was now “table stakes” for advisors.

Advisors can already use generative AI language models such as ChatGPT to generate content, analyze data, communicate with clients at unprecedented speed and scale and rapidly expand the capabilities of customer service reps.

Madan demonstrated how, in just a few minutes, he was able to use a generative AI application to write an email that could potentially be sent to thousands of clients but with personal touches.

And that’s just the beginning. As the technology evolves, AI “will change everything we do in our day-to-day lives,” said Michael Comparato, head of commercial real estate for Benefit Street Partners.

So, should advisors fear for their jobs?

The way people use Google to research an illness is a good analogy, according to Moberg. 

“People now use Google to self-diagnose,” he explained, “but they still go to the doctor. They still want to talk to a human who is an expert. Clients of advisory firms can do more research using a Google search engine than ever before, but they still want to talk to an advisor who is an expert. The human overlay is very important.”

That being said, Moberg warned advisors that they must learn how to use AI and know how to prompt the application for better results and increased productivity.

“It’s not hard to learn how to use,” Moberg said. “You won’t get replaced by AI right away, but you might get replaced if you don’t know how to use it.”

The panelists emphasized that AI is still in a very early, embryonic and experimental stage with many questions yet to be answered.

One big question, the panelists said, was whether AI’s evolution will turn out to be more like the cloud, where just a handful of corporate giants dominate the data storage market, or the Internet, which opened up opportunities for an unlimited number of companies, individuals and organizations.

There will also be legal and regulatory issues, Madan said. It’s unlikely, for example, that firms will be allowed to have AI-generated content sent directly to clients without a human interface. The SEC is also looking into AI’s impact on predictive data analytics.

Data sharing agreements will also be scrutinized, Madan said. Data issues around AI are, in fact, still unresolved, one of the advisors in the audience noted. “Who owns the data?” said Jeff Metz, executive vice president at RTD Financial in Philadelphia. “That’s a real problem.”

Another major red flag is the tendency of generative AI software to spin out false facts or “hallucinations.” While it’s “way too early” to completely trust artificial intelligence with unedited analytics, Comparato said, “the potential is unbelievable.”