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In a recent article published on Professional Wealth Management - a specialized division of Financial Times providing content and insights tailored to wealth management professionals - industry leaders, including MDOTM's CEO & Co-Founder, Tommaso Migliore, discussed the growing significance of Generative AI in revolutionizing the wealth management landscape. Alongside executives from leading companies such as Citi Private Bank, Bank of Singapore, BlackRock and many others, the conversation delved into how AI is reshaping how institutional investors approach to portfolio construction and enhancement, to deliver better outcomes to their final clients.
While ‘analytical AI’, the computing part of AI, has been around for several years, the transformative part has been brought by Generative AI, which gives a different dimension to numbers and the models themselves. Advisers, for instance, can get a detailed analysis of how a portfolio is allocated, but also, through GenAI, receive a commentary in different languages on why the portfolio is positioned or has been rebalanced in a certain way. This enormously facilitates client meetings and performance explanation.
Tommaso Migliore, CEO & Co-Founder of MDOTM Ltd
MDOTM’s CEO, echoing the sentiments of industry peers, underscored the crucial role of GenAI in revolutionizing wealth management strategies. He commented that, while Analytical AI has been a staple in the industry, it's Generative AI that is now redefining the landscape, emphasizing the profound shift toward more personalized, scalable and streamlined investment processes.
In investment management, the relationship between Generative and Analytical AI emerges as a powerful tool, enhancing the way investment decisions can be made and understood. Tommaso commented that Analytical AI, with its proficiency in data analysis, serves as the foundation of this partnership. It's the engine that processes vast datasets, examining historical market data, and economic indicators. Analytical AI has the capacity to uncover intricate trends, correlations, and patterns. It provides investment professionals with invaluable data-driven insights, risk assessments, and strategies for optimizing investment portfolios. Generative AI, on the other hand, plays a role in ensuring transparency and explainability in investment decisions. It works with human interaction and operates in response to specific prompts or queries. This aspect of Generative AI is particularly significant when applied to investments, as it bridges the gap between the analytical output of AI and the human understanding of the technology’s reasoning.
For instance, if Analytical AI recommends a shift in portfolio allocation, Generative AI can produce an explanation outlining the underlying factors, such as recent market developments, economic indicators, or company performance metrics. This interpretation empowers investment professionals to make informed decisions and communicate the rationale behind their choices effectively.
In this light, the implementation of GenAI not only streamlines processes and enhances productivity but also enables wealth managers to offer bespoke services to traditionally underserved client segments. As Nick Holeman of Betterment suggests, this technology could lower barriers to accessing financial advice, particularly for affluent customers. Moreover, GenAI's integration into wealth management operations has resulted in significant productivity gains, as noted by Celine Le Cotonnec from Bank of Singapore. By harnessing AI's capabilities, private banks can unlock insights from vast amounts of data, gaining a competitive edge in the market.
Also City, a leading global bank that serves more than 200 million customer accounts and does business in more than 160 countries, aims at using AI as a tool that “streamlines and automates processes”, while allowing private bankers to spend their time serving clients.
This article highlights how the nexus between Generative and Analytical AI is reshaping the modern approach towards investment management. Analytical AI's data-driven capabilities are harnessed to uncover hidden insights and optimise portfolios, while Generative AI ensures these insights are translated into clear and comprehensible explanations.
Together, they really empower investment professionals with a data-driven precision and human-centric understanding.
Originally published on Financial Times
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About MDOTM Ltd
Founded in London, MDOTM Ltd is a strategic partner of numerous institutional counterparts to integrate Analytical and Generative AI into their investment processes and develop new solutions such as discretionary mandates, funds, and certificates. Selected by Google and recognised as one of the best AI companies, it has raised over $10 million from institutional investors and finance professionals, making it one of the world's largest firms specialising in Artificial Intelligence for investments. For more information, visit www.mdotm.ai
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