Morgan Stanley Arms Advisors with Algorithms as Finance Embraces Automation

Morgan Stanley Arms Advisors with Algorithms as Finance Embraces Automation

Morgan Stanley is poised to implement a project known as “next best action,” which will equip its 16,000 financial advisors with machine learning algorithms to help them provide better and more timely recommendations to clients, Hugh Son reports at Bloomberg:

At Morgan Stanley, algorithms will send employees multiple-choice recommendations based on things like market changes and events in a client’s life, according to Jeff McMillan, chief analytics and data officer for the bank’s wealth-management division. Phone, email and website interactions will be cataloged so machine-learning programs can track and improve their suggestions over time to generate more business with customers, he said. …

The idea is that advisers, who typically build relationships with hundreds of clients over decades, face an overwhelming amount of information about markets and the lives of their wealthy wards. New York-based Morgan Stanley is seeking to give humans an edge by prodding them to engage at just the right moments.

The move comes at a time when the financial industry is moving increasingly toward automation overall, with artificial intelligence beginning to replace human talent at some insurers and hedge funds. Back in February, Son reported that JPMorgan Chase’s machine learning software had taken over tasks that used to consume 360,000 hours of lawyers’ and loan officers’ time each year, and in January, GeekWire’s Dan Richman took a look at a project by the “robo-advisor” company LendingRobot billed as a fully automated hedge fund, using machine learning and blockchain technology to invest without any human intervention.

Morgan Stanley’s project is an interesting aspect of (or response to) these trends, as it uses machine learning to augment the work of its human employees rather than to replace them. With an algorithm taking mundane tasks off their hands and helping out with their analyses and recommendations, the investment bank’s advisors will have more time and energy to devote to client management and customer service—not unlike the impact techno-optimists expect automation to have in fields as diverse as fast food, law, and HR.

Time will tell what impact these changes will have on job availability and salaries, but this development suggests that the future of advising may not be fully robotic, but rather offer clients a range of options—from cheaper, fully automated plans for those with simple finances, to high-touch service for wealthier clients with more complex concerns.