Morgan Stanley Launching AI Tool for Advisors

After testing it with 1,000 financial advisors for some months, the bank will roll out an AI bot this month to drive its wealth division.

By Tatiana Bautzer & Lananh Nguyen

Wealthy clients going to a Morgan Stanley financial advisor to discuss their investments may have a different sort of experience in the future: having a chatbot listen to their conversation.

After testing it with 1,000 financial advisors for some months, the bank will roll out a generative artificial intelligence bot this month, developed with the makers of ChatGPT, OpenAI.

Bankers can use the virtual assistant to quickly find research or forms instead of sifting through hundreds of thousands of documents.

The bank is also developing technology that eventually, with clients’ permission, could create a meeting summary of the conversation, draft a follow-up email suggesting next steps, update the bank’s sales database, schedule a follow-up appointment, and learn how to help advisers manage clients’ finances on areas such as taxes, retirement savings and inheritances. The details of the program have not yet been reported.

“The impact (of AI) will be very significant,” potentially comparable to the advent of the internet, said Sal Cucchiara, Morgan Stanley’s chief information officer of wealth and investment management, who is among the executives driving the bank’s push into AI.

Cucchiara, tasked with constantly scanning Silicon Valley for potential tech vendors, met OpenAI executives in 2022, before the fast-growing app ChatGPT got mainstream usage.

“It quickly became clear we needed to partner with them, they were far ahead of everybody else,” he said.

Andy Saperstein, Morgan Stanley’s co-president and head of wealth management, then flew to California to discuss a partnership with OpenAI CEO Sam Altman and Boris Power, a technical staff member at the company.

They signed a deal last summer in which Morgan Stanley has preferred access in product development for wealth management. Executives from the two companies celebrated over a dinner hosted by Saperstein, a candidate to become the bank’s next CEO.

OpenAI declined to comment.

While the bot will give insights and administrative support to financial advisers, investment advice will remain the purview of humans.

“The adviser is still at the center,” said Cucchiara. For now, employees view the technology as a helpful tool and aren’t worried that they’ll be replaced by bots, he said.

Wealth Race

The AI initiative is part of Morgan Stanley’s strategy to drive its wealth division, where net revenue surged 16% to a record in the second quarter and new client assets grew $90 billion.

CEO James Gorman, who has spearheaded a series of major deals that funneled more money into the wealth business, aims to reach $10 trillion in assets under management.

Morgan Stanley is not alone in its AI efforts. While banks already use AI to crunch numbers, detect fraud and analyze customer transactions, Wall Street giants are developing more sophisticated uses of generative AI that is capable of generating text, images and other data.

JPMorgan Chase named Teresa Heitsenrether its chief data and analytics officer in June to lead AI adoption across the largest U.S. lender. Rival Bank of America’s virtual assistant, Erica, has had more than a billion interactions with clients since it was introduced in 2018.

Elsewhere, Moody’s Analytics is also working with OpenAI and Microsoft to develop a research assistant that can be used by clients, said Nick Reed, its chief product officer.

Large banks are the most advanced among financial firms in their adoption of AI, but asset managers, traders and insurers are also deploying it, said Michael Abbott, global banking lead at consulting firm Accenture.

“We’re beginning to see customer services led by artificial intelligence spread among the largest banks,” said Abbott, who is working on hundreds of case studies with lenders looking to use AI.

This article was provided by Reuters.

Latest news

Advisors Dabbling in DC Market Seek Greater Support: Cerulli

Providing them with tools, education and guidance would help them grow their retirement-plan businesses, says Cerulli Associates.

Executives Traveling on Corporate Jets Face IRS Scrutiny

Do you have executive clients who might be using a corporate jet for personal use? Tell them the IRS has announced a crackdown.

U.S. Solo Renters Age 50+ Way Up

The number living alone rose by more than half a million, but there’s been a growing trend of older people living with roommates.

SEC Settles Charges Against Former Advisor

The former advisor, Andrew Komarow, was known in the industry for working with special needs families and neurodivergent clients.

SEC Fines TIAA Unit $2.2M for Violating Reg BI

The SEC said a TIAA broker-dealer charged some retail customers too much to invest in mutual-fund choices in an IRA.

Even Millionaires Flunk Retirement 101: Study

The American College of Financial Services plans to use its new research to help advisors improve client conversations.