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How AI can help those 2023 financial resolutions become reality By muller

If an investor kicked off 2022 by setting some kind of financial goal as one of their New Year’s resolutions, there’s a good chance they’re just a few weeks away from realizing they’ve missed the mark.

But that realization probably won’t stop them from doing their best Philadelphia Phillies impression and saying “maybe next year.” Most investors will in fact do just that, and without the guidance of a financial advisor.

A new year-end survey from Magnifi, TIFIN’s search-powered marketplace for investments, found that 58% of Americans are either not on track or don’t know if they’re on track to achieve their financial goals in 2022. Jon Klaff, Magnifi’s general manager for the consumer businesssaid that the same survey found 72% of respondents planning to get back in the ring and invest next year.

While Klaff said that number was encouraging, the majority of the 1,000 respondents polled in mid-October (36%) said that planned to invest on their own. Another 32% will work with a financial advisor and 4% said they’ll turn to a robo-advisor.

The remaining 28% don’t plan to invest at all.

Knowing both the high failure rate and the desire to go it alone, Klaff said TIFIN and Magnifi want to leverage AI to fill in the gaps. The firm just launched Magnifi Personal, a tool that gives investors access to an AI-powered investing assistant that delivers insights, portfolio analysis, guidance and long-term planning. Subscribers can chat with their assistant about questions like “How can I invest in the current market conditions?” or “What sectors performed best this month?” or “Compare Apple, Amazon, Tesla, and Netflix” and immediately get the data and guidance needed.

Klaff said that the survey found that the main reasons people don’t invest are lack of knowledge/confidence (47%) or lack of understanding about where to begin (27%).

“Knowing that more than half of Americans don’t feel confident in their long-term financial outlook, now is the time more than ever to start thinking about your roadmap to investing,” Klaff said. “Magnifi doesn’t just give people access to independently invest, it gives them the knowledge to make informed, confident decisions that will enable them to become a more empowered investor.

Financial Planning caught up with Klaff earlier this month to discuss the current enthusiasm toward automation in wealth management and why the true power of artificial intelligence is human intent.

This interview has been lightly edited for length and clarity.

Financial Planning: So what is Magnifi Personal all about, and what problem is it trying to solve for advisors and investors?

Jon Klaff: It’s really coming off the heels of the work that TIFIN Wealthtech was already doing … providing AI insights around customers to financial advisors and asset managers to help inform product development. Last year, we started Magnifi with our search bar, and it got an amazing buzz. And it was actually a great useful tool. And the reason why is that people were curious. Mostly DIY investors about how much they could pull out of this. How much could it help them develop their portfolios? How could it help them street them into funds that would help them support their portfolio. But what we realized immediately, is people don’t have a lot of intent. They were sitting there in front of that search bar and going like, “what do I do now?” I’m hearing about all this stuff in the news, but I’m not developing my portfolio. So really, ultimately, the problem that we’re solving for is something that financial advisors are — kind of the high end of the market — solving for, and robo-advisors on the lower end of the market are solving for, which is to help customers feel confident about putting their money to work for long-term impact and long-term financial goals.

When we built the tools, the problem statement was really, how do we really help these customers feel empowered to build their own portfolio and really protect their personal interests, their own risk tolerance and their own life goals? And what will give them the power to make their choices themselves?. And the problem that we’re seeing is that the data and the intelligence really hasn’t pushed into the highest end of the market and hasn’t been truly democratized for DIY investors in an objective way. Or on the low end of the market, it’s completely obfuscated. You set up your risk tolerance. You set up a general framework of when you want to retire. And then it’s a “one-to-many” tool. Essentially you’re a cohort, and you don’t really make the choices on how your personal interests can be impacted. So now, how do you do it? This is where the AI ​​magic comes in. AI ultimately is really just processing thousands upon thousands of data inputs. And in nanoseconds, it’s making sense of that data and giving you a recommendation of how to move forward. And it’s doing it in a couple of different ways. First and foremost, it’s trying to understand what your intent is. What are you trying to get out of the act of investing in the market?

PF: To pause there, why is intent so important when talking about AI? And how is it better than a DIY investor just getting in there and playing the market?

JK: You know, that goes against our ethos in general. What we’re really trying to do with Magnifi — and really what (TIFIN founder) Dr. Vinay Nair is really speaks to the public about is — we’ve got to get out of this gambling mindset. We’re not setting up Americans for future success, and what is happening in the market is quite toxic. And when you start blindly following, and it’s not mapped to any kind of logical historical data up and macroeconomic impact or really any stimulus that’s going on today, then you’re really just sitting there trying to make a quick buck. And that’s not investing. Just go out and get FanDuel. There’s nothing wrong with that. But that’s different. That’s what that intention is. That’s the gamification of securities. And we’re not into that. We believe that there’s a big, big portion of the population not being served right now. And a lot of them are women who actually have a lot of cash. And all (investors) are seeing is there’s a lot of scariness in the market. You’ve got layoffs at Meta. You’ve got all this going on at Twitter. And they’re like, ‘well, I know, it’s like I want to invest, but I’m too nervous right now to lose my money’. And even what we saw on our surveys … about 30% of our customers actually have a fear of losing money. It’s because they just don’t have the historical perspective.

PF: Now there are a lot of new AI and machine learning solutions out there. And it can be hard to separate those who do it well and those who don’t. Magnifiwas recently honored for getting it right. What makes your product different?

JK: I think it’s a testament to our tech and product engineering teams. Frankly, that’s really their secret sauce. From my standpoint, there’s a lot of fly-by-nights in this industry. And I will say that the reason why we decided to keep the “Magnifi by TIFIN” moniker at the brand level is that TIFIN has done it the right way on the enterprise side for many, many years. And they’ve built credibility. Our investors … JP Morgan. Broadridge, Franklin Templeton, Morningstar, these are all strategic partners or investors who have been using our services and seeing value in artificial intelligence supporting their advisory business and their asset management business. So the credibility, frankly, is there. And this is why we believe that the retail focus of this will be successful: Because we know we’ve been able to help end investors through our financial advisory services. So it’s just a matter of now turning that magnifying lens, if you will, and putting a highlight on retail customer needs.

The other reason is the principles that we believe in. We just talked about the ethics of what we’re doing, and everybody is talking about this right now. We’re not the only ones talking about how this is a great time to start investing in a down market. You’ve got some great opportunities right now. What’s missing here, though, is that customers are smarter than they were 10 years ago. And they’re more into understanding, how does this work? And how will this benefit me? When we look at our technology, if you think about it, I couldn’t make the statement that Magnifi Personal is like the Alexa of investing 10 years ago because people would be like, what’s Alexa? So the idea here is that AI is pervasive, but being pointed at the right thing.

This is actually where if you have the likes of Elon Musk talking about AI or what could happen if AI is trained to do unethical things, it can create a lot of negativity around AI. I think that Magnifi is really going to benefit because we have a point of view, we have a mission to help simplify the investments for DIY investors and we have a mission to help them with their long-term goals. If you have that mission and everything is filtered around a mission to do good by your customer, then it makes sure the AI ​​that you’re creating doesn’t go off and start creating noise or bad behavior. If you train AI to do the right thing, it’ll have really good outcomes for customers. And frankly, that’s the type of business that I want to do. That’s what pulled me over here from working at Facebook and Meta, and before that PayPal and Google. I believe in the mission of what we’re trying to solve.

PF: What’s next for AI in wealth management, in your opinion? Are you excited about the potential?

JK: One of the kinds of things that I’m most excited about is that I think the sky’s the limit. I think when you start to look at this in terms of being able to have our tool kind of pointed at all of your portfolios … being able to ingest that information and then having a much richer understanding of who you are, I think it’s going to give us a lot of opportunity. I’m also extremely excited about where we’re going to go with retirement planning and optimization of your portfolio on an ongoing basis. We have the capability today to provide you 24/7 guidance on your portfolio. And soon we’ll be able to knock on your door and say, hey, Justin, some of the equities or securities in your portfolio are down or up. Would you like me to help you figure out how to optimize or maximize your outcomes? And right now, that’s a situation where I think most DIY investors are used to robo-advising, which is set it and forget it. So I’m really looking forward to the behavior change of saying, I want to be on this app, I want to learn and I want to be active with where I’m going.

And one last point on it. What I’m excited about, and the beauty about AI is, the more people interact with it, the better we can become. We’re a young company, and I’m just looking forward to seeing how people use it. I think there’s a use case that we’re probably sitting on that we haven’t even thought about yet. And that’s the beauty of it. Once people start using it, instead of asking us questions, we can say, wow, that’s a journey that has a dead end. And we can actually fix that and help these many millions of people who are going on that journey.

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