With the growing adoption of AI across all areas in financial services, the realm of investment planning is no exception and emerges as one of the key focal points for companies planning to build innovative solutions.


Copyright: forbes.com – “AI In Investment Planning: Risks, Rewards And The Road Ahead”


SwissCognitive_Logo_RGBInterestingly, over the past year, while large language models have taken center stage, the power of traditional AI has taken a back seat. Although these LLMs seem invaluable for automating certain administrative tasks such as report generation, the broader application and maturity of various other deep learning models within the financial investment sector are still on the horizon.

Current State

The integration of AI into investment planning still has significant room for growth. As it stands, consultations with financial advisors often include preselected potential investment strategies, along with evidence of associated historical returns.

There are two primary issues with this approach. Firstly, these strategies are preset, such that investors cannot form their unique optimal portfolio mixes based on specific preferences. For instance, if an investor wanted portfolio options that would safeguard against a simultaneous rise in the unemployment rate and oil prices, they wouldn’t have the necessary insight to determine the ideal asset mix for their portfolio.

Secondly, the duration of the presented historical returns is often capped at a 10-year period, overlooking some significant economic downturns. Therefore, it’s imperative to have sophisticated investment planning tools capable of dynamically constructing asset portfolios, enabling more personalized, robust and informed investment planning.

Demand For AI

Traditional methods of forecasting portfolio return through linear extrapolation over decades have become obsolete, and well-informed investors are readily embracing AI-powered tools to determine their portfolio strategy.According to a CFP Board survey released in August 2023, a staggering 31% of investors would be comfortable implementing AI’s financial advice without verifying it first, and another 21% would be comfortable to a certain degree after verification.[…]

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