(W): What role does AI currently play in the wealth management industry in general, and in portfolio construction and investing in particular?
Allan Lane (AL): Regarding the notion what role there is for AI in wealth management, let me start by leaving the academic discussion of what actually constitutes AI to others. I think most individuals know what is meant here. For example, are there patterns to the way different assets classes behave across the economic cycle? If so, can that insight be exploited to improve a buy and hold strategy, both on the performance and risk management front?
Historically, a significant percentage of quant hedge funds have used market and macroeconomic data to develop their proprietary strategies, so nothing new here. What is different now though, is the extent to which big data dominates the intellectual arms race.
Ironically, AI will continue to offer the most benefits to the less glamorous corners of the wealth management ecosystem. Only recently I read that JP Morgan was going to introduce Amazon’s virtual assistant, Alexa, to service clients’ enquiries for reports and the like.
W: How do you see the role of AI in the wealth management and investment industry changing and evolving in the coming years?
AL: In many ways, AI has an image problem. More effort will be needed to promote the benefits and to dispel the notion that it will only take people’s jobs away. Where I see its biggest role is in the area of information curating. With every one of us drowning in too much data, all of us need help in this area.
At Algo-Chain, we have decided to share our Intelligent Fund Selection process with anyone who’s interested. Over a ten-year period, we have developed a suite of scoring metrics for the suitability of every conceivable type of ETF, and with over 10,000 ETFs listed globally, it makes sense to let technology do the heavy lifting.