What if you could be alerted to the very high probability that one of your clients was about to leave or withdraw their money from a platform investment?
You could then call that client to check in, see how they are and find out what had changed for them, writes Chris Law, head of UK sales at Morningstar Wealth Platform.
You might then find out that they were worried about rising living costs to the point they had decided to cash in their investments. After a good chat and calmly looking at all the options you could help your client find a better solution, one which would leave their long-term investments intact.
While much has been written about the potential threat posed to advisers by AI, and primarily GPT-4 (the latest incarnation of now infamous ChatGPT), there’s another side to the story. AI, when applied correctly, can be a highly effective resource for advice firms.
For us, it’s nothing to do with mimicking the work of advisers, but rather harnessing AI to look for patterns in human actions, the results of which can provide meaningful information of great use in the advice relationship.
That might sound esoteric, but our adviser customers benefit from the outcomes, including in the above real-life example. By exploiting ‘machine learning’ for a very practical purpose we’re able to keep advisers better informed about their clients and alert them when they may need to step in to provide additional support or reassurance.
Harnessing data through technology for human intervention
We built and tested innovative algorithms designed to detect and collate changes in clients’ behaviour, so we could alert advisers and give them the opportunity to act.
Every time a client closed their account or parted from their adviser we could look at their actions in the run up to detect changes in their behaviour: pages they viewed, time spent, the IP address, whether they printed anything and so on.
From there, we could establish the probability that they would leave with 90% accuracy.
However, even at that point we have seen that timely adviser contact can make all the difference.
Changing behaviour tells a story
Behavioural changes in how an investor engages with their client portal may suggest they are planning to close their account.
This is what gets flagged to advisers through the adviser dashboard.
For example, a client’s behaviour clearly suggested they were about to leave their adviser. The adviser called their client, who was in the middle of a divorce, and found out their ex-partner’s new adviser had asked for a lot of information with the aim of getting them to switch to that firm. The client’s own adviser was able to reassure their client during a difficult and turbulent time.
It may also highlight that the client is potentially vulnerable, giving the adviser an opportunity to step in.
A diagnosis of a serious health condition prompted one client to pay more attention to their finances than normal. While not planning to leave the adviser they did have a number of questions which their adviser could then help with.
Targeted, timely and informed contact in this way is a lot more business efficient than contacting every single client on a fixed rota. In many cases, simply receiving reassurance from their adviser exactly at the right time is all it takes to keep a client on track in their financial plan.
Bringing visibility to vulnerability
The net result of this application of AI is empowering advisers to focus on clients who may need reassurance or action to remedy an issue affecting them. This perfectly aligns with the new Consumer Duty, which obliges advice firms to reinforce good communication with clients as well as avoid causing foreseeable harm owing in some instances to the onset of client vulnerability.
Steering the client away from harm is one of the biggest challenges for advisers in the new era of Consumer Duty. Our deployment of AI can help and with no additional resource required from the advice business. All that’s required is to check their platform dashboard for alerts. Then it’s for them to decide how and when to act.
All told, this is AI grounded in practicality. We’ve been quietly developing and strengthening this machine learning and we’ll continue pushing the boundaries of the technology to maximise its real-world usefulness to advisers and their clients.
This article was written for International Adviser by Chris Law, head of UK sales at Morningstar Wealth Platform.
