22 March 2023
Wealth management incorporates an array of different services, with asset management prominent. Over the years, we have seen an increase in the use of technology in the field of asset management, which is making a monumental difference in investment strategies. Unfortunately, many online technology-based services we see today are taken for granted, although they have taken years and a considerable amount of investment to shape.
So, what else can you expect concerning technology, wealth management and, more specifically, asset management?
Whether looking at artificial intelligence, machine learning or big data, there have been some considerable developments concerning the technology used in asset management. Interestingly, while we focus on technology, the underlying data has remained the same. This is trading data that goes back many years, able to reveal trends and twists that we may not have noticed at the time. Many people argue that technology involved in wealth management and asset management is used to speed up the traditional human trading process – shortening trends?
Artificial intelligence is the ability to program a machine to think and act like a human and continuously learn. Regarding asset management, this is especially useful with investment decision-making processes and risk management. On the one hand, artificial intelligence will never fully replicate the human mind because the human mind is so volatile. But on the other hand, you could argue that artificial intelligence removes emotion, creating a "pure" decision-making processwith no bias.
Whether or not you are for or against artificial intelligence, itis part of our everyday life and has been for many years.
Machine learning and artificial intelligence, in this instance in asset management, are often considered one and the same. While there are similar traits in that they both look to mimic the human decision-making process, this is achieved in different ways. When it comes to machine learning, this involves algorithms which are modelled on the human brain and therefore require data for learning foundations.
Machine learning and artificial intelligence have proven to be extremely powerful in finance and, particularly, asset management. It is not just the speed of processing but also the ability to learn “from mistakes”.
For many years, data has been recognised as a potent currency for predicting the future. In the world of finance and asset management, history tends to repeat itself time and time again, although sometimes the timescales are shortened. Therefore the ability to collect and analyse vast amounts of data often referred to as "big data", can be very useful in areas such as the personalisation of investment strategies.
Analysing data from similar situations and related dealings makes it possible to create a "near-perfect" investment strategy for an individual. Whether this creates a self-fulfilling prophecy situation is debatable, but everything is based on the same data we, as humans, use to make a decision.
Asset management is an integral part of the broader wealth management sector, which involves the protection and enhancement of wealth on a long-term basis. The use of technology is prevalent, from simple client account access to the identification of new investment trends and analysis of past data. Over the last 30 or 40 years, the most visual change due to technology is the speed of transactions and the rate at which trends change and markets move.
In its simplest form, technology has been a massive benefit to the world of financial services. Whether or not it has created its own data is debatable, but ultimately whether artificial intelligence, machine learning or big data, it is all based on historic activity used to predict the future. As the leading lights in finance continue to utilise new technology, others must follow suit to remain competitive on service and price.
Do we have a situation where we automatically expect the latest technology from our wealth manager/investment adviser? Is this impacting markets?
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