Artificial Intelligence Not The Silver Bullet For Securing Wealthy Clients
Despite being touted as a gamechanger, artificial intelligence (AI) has not lived up to the hype when it comes to attracting extremely wealthy clients for financial advisory firms. This is the sentiment echoed by the heads of premier advisory firms. While AI can indeed provide data and contact details for the super-rich, making use of this information is a different matter altogether.
"There are limits to what AI can achieve when it comes to securing clients with a net worth exceeding $100 million," said the CEO of a major advisory firm. "It's naive to expect such individuals to respond positively to unsolicited emails and willingly share their financial details."
Personal Touch Trumps AI in Client Acquisition
The CEO believes that the advisory business grows when firms offer personalized services. He cited an example of how his firm once arranged a private jet within an hour for a client who had to urgently fly from New Orleans to Albany, New York. "Such instances make a difference. They are the means through which we expand our operations. We aim to create moments that matter for our clients."
He expressed skepticism over the effectiveness of AI in client acquisition, remarking, "These databases have been present for a long time. Today, people have simply attached an AI layer to mine the database. But most of the time, the strategies used to gather data from public or purchasable sources remain the same, and these strategies aim to feed you lists of potential clients. We are capable of doing that ourselves."
Critiques of AI Client Prospecting Tools
A high-ranking official at a reputable national advisory firm shared that he has tested at least 20 AI client prospecting tools in the past half year. He found that most of these tools are based on widely used large language models like Claude and GPT. "It's like they're simply putting a fresh coat of paint on one of five major language models and convincing you that their information is superior. Do I pay them a substantial fee, or do I consult my IT team to find a cost-effective alternative?" he questioned.
Nonexclusive Data Presents Little Competitive Advantage
The head of growth at a leading independent wealth management firm echoed these sentiments. He explained that when his firm used to cold call potential clients using these databases, the clients usually already had an advisor or had received calls from numerous other firms.
He stated that over the past five years, client referrals and personal networks have accounted for 40% and 30% of the firm's organic growth, respectively. Further, 30% of their growth comes from connections made with professionals such as trust and estate lawyers and accountants. These professionals typically work with clients undergoing a liquidity event, like inheriting wealth or selling a business.
"We believe that being recognized as market experts and consistently showing up where the professional community congregates is the most effective business growth strategy," he said.
Quality Over Quantity
The firm has a yearly target of acquiring 25 to 30 new clients in the U.S., which could add approximately $1.5 billion to $2 billion in new assets. Despite the slow process, the firm prioritizes quality over quantity.
AI as a Complementary Tool
The CEO of a tech startup specializing in AI client prospecting views AI as a supplement to traditional outreach methods, not a replacement. For example, AI can help identify the right audience for exclusive events, or those who might need financial advice following a significant life event.
"There is a degree of skepticism we need to overcome when we talk to firms catering to the ultra-wealthy, who tend to shy away from AI in favor of a more personalized, high-end approach," she said. "However, the goal here is to unearth more data about your clients or prospects than you might know."
While the impact of AI on securing new business remains a subject of debate, industry leaders remain open to new possibilities. "If someone has a better solution, we're certainly excited about what the future holds," said the head of growth at the independent wealth management firm.