Technology-centric RIA Farther has launched a new AI-powered investment proposal tool for advisors reaching the closing stage with prospective clients. Advisors can upload a prospective client’s account statements to Farther’s AI, which then analyzes the data to match the prospective client with the best-fitting investment portfolio models offered by the firm.
“The whole point of this workflow is to close a prospective client, and the more you can deliver with speed with that sort of workflow, the more confidence that prospect is going to have so you don't lose momentum there. We've seen that our advisors have a lot of success with the speed associated with this,” Karishma Motwani, director of technical product management at Farther, told InvestmentNews. "An advisor who wants to grow is going to adopt the tool, because it allows them to grow their book much more quickly than they were previously able to."
Early internal research from Farther shows its new tool cuts time for an advisor to create a proposal down to seven minutes on average. The proposal process could traditionally take hours for advisors and typically requires them to use Excel, PowerPoint and other third-party platforms to analyze data and present to clients, which Farther says creates more compliance obstacles and data risk exposure than its new in-house AI tool.
“Before we built this tool, our existing advisors as well as advisors sort of everywhere, were using not just one third party tool but a suite of third party tools to accomplish this one task,” said Motwani. “They're using Excel to get the data in, and then they're using VRGL sometimes to extract some data, they're going to put that in BlackRock 360 and then put it in a PowerPoint.”
Among the roughly 150 advisors at Farther, more than 25 have begun using AI-powered investment proposals. RIAs that join Farther’s platform retain ownership of their books and pay the firm a portion of their revenue in exchange for access to its tech stack, investment team and administrative support. Nearly $7 billion in client assets are managed by Farther, which was founded in 2019 and raised $72 million last year with funding from Alphabet’s CapitalG fund.
“It helps me quickly visualize and present personalized proposals, freeing up time to focus on the strategy and recommendations behind them,” Farther VP and advisor Parker O’Sullivan said of the new AI tool. “That combination has made my pitches more impactful, resulting in new business and additional wallet share.”
Advisors can alter the AI-produced investment proposals by manually modifying asset mixes or holdings. Motwani was part of a five-person engineering team that spent eight weeks building Farther’s AI investment proposal tool, which is available on its web and mobile app.
A recent study from wealth technology consultancy F2 Strategy found that RIAs were four times more likely to use artificial intelligence than banks and trust companies. The SEC announced in June that it was withdrawing more than a dozen rules that were initially proposed during the Biden administration, including rules intended to regulate how RIAs can use AI and predictive data analytics.
"I'm glad to see that from a regulatory perspective, we're going to get the ability to show that we're responsible and set the standard for how it's done,” Farther co-founder and CTO Brad Genser said of the SEC’s relaxed regulations. “I'm glad to see that we'll have a little bit more freedom and space to innovate here, because you can see advisors and clients are benefiting from the responsible application of AI,” he added.
“It's up to us as business leaders to make sure that we have a focus on security, safety, and really aren't pushing these things too forward too fast before they're ready [...] where they might have real kind of harm, where say money is being actively traded by a [AI] hand on the switch,” said Genser.
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