Envestnet’s Molly Weiss on the Value of AI-Driven Insights in Financial Planning

“The beauty of artificial intelligence is that it can make the complex seem simple.” 

– Andrew Ng, British-American computer scientist and technology entrepreneur

It took 75 years for the telephone to reach 100 million users. Mobile phones reached that milestone in less than a quarter of that time (16 years) while Facebook hit it after only 4 years.

OpenAI ChatGPT reached 100 million users just two months after launching in November 2023, making it the fastest-growing consumer application in history.

It seems that now, just 18 months later, generative AI (GenAI) tools have made their way into every industry and application, even ones where it doesn’t appear to add much value.  These days, the label “Powered by AI” is just too attractive for marketers to resist attaching to almost every software product. 

One product category that is a perfect match to get a boost from AI is financial services. Surveys done by graphics hardware manufacturer NVidia, found that 91% of financial services firms are either assessing the viability of AI or already using it, with 86% reporting a net positive impact on revenue, and 82% saying it helped reduce costs.

Half of firms surveyed are using AI in operations and compliance, often to improve efficiency or gain an operational scale. There’s a lot of noise around AI and its potential, but perhaps the best use case is the ability for AI to deliver better insights into a client’s financial picture based on the tremendous amount of data wealth management collect.

We recently returned from a trip to Envestnet Elevate Conference 2024 in Phoenix and AI was central to much of what was presented, especially in comments from Molly Weiss, Envestnet’s Group President, Wealth Platforms. 

Following her keynote presentation, we spoke with Molly about where AI will be most effective in financial planning, and why context is key. With nearly two decades of experience in the industry with a focus on user experience, she knows what will have the greatest impact on the advisor-client relationship.

WealthTech Today: Thanks for joining us today, Molly. We’re seeing a lot of fintech startups embracing AI with varying degrees of success. What do you see as the most effective role for AI in financial planning?

Molly Weiss: Advisors should aim to offer holistic advice to their clients. They can make recommendations or generate insights if they have that complete view. One of the best use cases is when a client gives the advisor data about a brokerage account they had someplace else forever, and the advisor sees that it’s not performing well. Insights can tell the advisor that and then the advisor can run a proposal. (See Heavy Lifting: Leveraging AI to Drive Actionable Insights in Wealth Management)

WTT: As it guides them towards a solution, what types of insights would Envestnet provide, and can it generate suggestions to fix potential issues?

MW: Most insights address position concentration, account performance, or risk, and are more valuable since the insight is provided in the context of the entire portfolio. As for the second part of your question, it’s an interesting space because it’s not complicated, but we haven’t started any development yet.

We’ve been looking at what people are doing, though, and using that to guide what we’re developing in-house. And also we don’t know yet what the institutional players will do, so we have nothing to share about that at the moment.

WTT: So, AI has a role in ensuring a complete view of a client’s financial picture, including those parts a client might have forgotten about, and helping to find a solution. Where else do you see AI having a significant impact?

MW: If you think about where we were in financial planning many years ago, it was all done on a yellow legal pad. Now it’s digital, so we’ve come a long way. But the next step is proactively telling the advisor or the client, ‘you haven’t looked at your plan in six months, or ‘you’ve had a life change,’ so it’s time to review your financial plan. 

If you can marry CRM data and planning data, the insights we can generate will be more helpful since we can see the entire history of the relationship. We also recommend the advisor encourage their clients to use data aggregation, so they can see everything. (See Text and Chat: How AI is Reshaping Client-Advisor Communications)

WTT: Are these insights built into Tamarac and other Envestnet software? 

MW: Right now it’s separate, but with us focusing on context in our platforms, that is something we’re looking at in the coming year.

WTT: We’ve alluded to this, but it comes down to what your software considers to be a ‘life event,’ and the appropriate course of action. Does AI have a role in picking out these events better than traditional statistical methods? 

MW: Yes, I’d say it does. AI could tell an advisor a client has been slowly withdrawing from their account without making equal deposits. This is an opportunity for a conversation and a sign of a life event, but the advisor doesn’t know what it is yet. 

That insight alerts the advisor to reach out to find more information. Everyone’s scared of AI, but thanks to that an advisor can look at all the facts they have and ensure there are no surprises. (See Ep. 105: Merging Health & Wealth with Robert Kirk, InterGen Data)

WTT: Switching gears, we wanted to touch on Truelytics briefly. That seems like one area where much of what you’ve talked about is already seeing real-world applications, correct?

MW: With Truelytics, we’ve been talking about expanding how we work with RIAs. You’ve probably heard us talk about our marketplace and growth lab, and the plan still is to continue to provide more tools to advisors. And RIAs in particular, to understand their business, and help them grow their businesses, managed accounts are the way to go. 

So the concept of Truelytics and business valuation is tied into our goal to help RIAs grow their businesses more effectively and it ties directly into our belief that the best way to support growth is through outsourcing their managed accounts to Envestnet.

WTT: Can you think of other places where AI might generate valuable insight for advisors?

MW: It’s not AI-related, more of a data insight, but tax overlays are important to highlight.  We can see the information about realized or unrealized gains and losses in a client’s account, and that becomes an insight to alert the advisor of an opportunity to engage that portfolio with our tax overlay services. 

WTT: So it’s highlighting that you’re not talking to them now about the tax overlay but they had a huge realized or unrealized gain, and you should talk to this person about taxes. Does it also help them to sell the idea, such as things you should be saying to them? 

MW: We’ll give them the numbers, which show how adding overlay could help the client regarding what they realize or don’t realize this year. And it’s available all the time.

Wrapping Up

Our conversation with Molly highlighted the transformative potential of AI and contextual analytics in wealth management. Envestnet’s commitment to leveraging these technologies has led to their new abilities to proactively deliver holistic insights to advisors. 

Envestnet aims to empower advisors to offer more personalized and effective financial guidance by integrating AI-driven insights. While AI’s role is still evolving, its ability to generate valuable insights from comprehensive data sets is already proving beneficial. 

AI can help financial advisors maintain a complete and current view of their client’s financial health, from identifying underperforming assets to recognizing life events that necessitate a complete financial review.

For more information on how AI can help your firm increase growth, productivity and operational efficiency, contact our team at Ezra Group. 

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The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com