AI + Finance

Last night I moderated a panel for the Museum of American Finance at Betterment’s headquarters in the Flatiron District of New York City. A couple hundred people from the intersection of traditional finance and technology came by to hear about the emergence AI in the financial services industry.

The program was introduced by David Cowen, President and CEO of the Museum of American Finance and Sarah Kirshbaum Levy, CEO of Betterment.

My panelists were Hema Balasubramanian, the VP of Strategy & Innovation at the Fidelity Center for Applied Technology. John Milehan, the CTO of Betterment and Jeremy Olshan, the Personal Finance Bureau Chief at The Wall Street Journal.

Before the event we surveyed the crowd on their feelings about AI. One thing that jumped out at me was the willingness of the audience to accept advice from AI all by itself. This is probably not representative of the American public at large - people showing up to a talk about the possibilities of AI is probably a fairly self-selecting group, but still. The majority of the audience would prefer human financial advisor involvement with the assistance of AI tools, which is my bet for how the future will play out (a hundred years of innovation on Wall Street tells me this that this is the most likely outcome).

One of the things I got to do last night was discuss some of the interesting things I am seeing from the AI startups that have launched in the wealth space. There are a lot of them. I’ve spent the last few weeks taking meetings with these founders and demo-ing their tech. I’ve come away from these meetings with the feeling that the widespread adoption of AI tools among financial advisors is a) happening faster than you think and b) absolutely inevitable.

This is not crypto, which has not become anywhere near being mainstream for financial advice practices. This is not robo, which only a tiny fraction of advisors have embraced despite the fact that the technology has been around for more than twelve years now. This is different. I am absolutely convinced that AI workflows will be as ubiquitous as the use of email among financial advisory firms by this time next year.

It’s not coming, it’s already here.

AI Wealth Management Startups

I wanted to shout out some of the companies I’ve talked to in recent days and provide you with links to their sites so you can see what’s going on for yourself.

In no particular order, here’s who I’ve been talking to…

Jump AI

This is my favorite thing I’ve seen so far. AI note-taking to save advisors and clients time before and after meetings is the most obvious killer app for our industry. Parker Ence and Tim Chaves tell me they’re already operational and signing up RIAs every week. From their deck, here are the pain points they are helping RIAs solve on a daily basis:

I have financial planners working at my firm who are managing hundreds of millions of dollars. I don’t want them spending hours each week laboring over Salesforce updates and task assignments. I want them talking to clients and engaging in the planning itself. That’s the part that the clients truly value. We’ve got para-planners who are assisting lead advisors on these calls but even their time could be put to better use. This technology could be game-changing in terms of our ability to scale our firm and direct our resources to where they really make a difference.

The Jump AI guys won best in show at a recent wealth management conference after an on-stage demo bake-off. Right now they seem to be in the lead although there are many startups building AI note-taking and other similar tools for our space.

Artificial Intelligence Risk Inc (AIR)

I met with Alec Crawford and Joe McCann at AIR and they took me through the importance of having a risk-focused AI solution in place, including a customized large language model (LLM) user interface that purpose-built for financial advisors and family offices. Their version of this is called RIA GPT and the general idea is that it sits apart from the LLM so that you don’t have financial advisors typing their clients’ social security numbers into Google Gemini or OpenAI.

AI has become a buzzword of course, so AIR believes its important to be more specific when describing the opportunities and risks:

Alec is an AI expert who saw the opportunity to bring his knowledge and experience into our field last summer. He comes from both a computer science background and a wealth of experience at traditional Wall Street firms - his credentials are untouchable:

Anyway, serious advisors are going to want to get on this guy’s calendar. The compliance challenges of vetting and implementing AI technology are going to be a huge part of the story. Especially when the SEC comes around with their inevitable examination sweep focused on the topic. This is a when, not an if. If you’re going to be putting things about AI on your website, on social media or in your marketing materials, you better know what the f*** you’re talking about.

Alec has a substack you can subscribe to for his ongoing insights on AI and other developments.

Finny AI

Eden Ovadia began her career working at BCG NYC consulting for tech, finance and private equity firms and it was there that she spotted an opportunity to solve a major pain point for financial advisors: Finding new clients is really hard. Doing so efficiently is almost impossible for thousands of firms. Eden created FinnyAI which uses AI processing to identify and screen potential candidates just at the moment where they might actually need an advisor’s help:

Her version 2.0 is coming this July and she’s got a waitlist already for advisors to check it out. In the new iteration, Finny AI hopes to be even more proactive, using AI as an agent to reach out and sort candidates for meetings.

ARQA

I also spoke with Haik Sahakyan who founded a company called ARQA. ARQA’s KorScript AI product takes documents and turns them into data, which is similar to the company we currently love, VRGL Wealth, a startup we’ve talked about in the past where we are not only a user but a shareholder as well. Haik’s company has a GPT-like interface that allows advisors and firm management to ask natural-language questions and get back answers, such as “How many households have cash balances above 2%?” or “What are my largest relationships in the state of Wisconsin?”

I believe that this functionality will be everywhere by the end of the year. The degree to which companies like ARQA are able to plug into Salesforce, Redtail, Orion and other central providers of software will determine how useful these prompts are. Of course, there are many compliance issues that could arise from the use of tools like these so Haik will have to be very thoughtful about the execution.

AssetLink

My friend Devon Drew has built the first ever AI platform to connect asset managers and advisors based on what both parties are looking for in a two-way exchange of information designed to speed up and enhance the manager due diligence process. Wholesalers from the nations largest asset management firms can learn more about the advisors who are most likely to be interested in what their firms offer, obviating the need for rounds of golf, lunch-and-learns and all sorts of other analog Twentieth Century techniques of networking that nobody has time for anymore. He’s got a patent for his technology and a great story about his time as a Vanguard wholesaler inspiring the idea.

If you’re an asset management firm looking to break through the noise and meet the right prospects, Devon’s platform, AssetLink, is probably the thing you’ve been looking for. Advisors can use the platform to perform AI-assisted searches to narrow down fund and strategy options across all categories, from stocks to bonds, alts to tactical. Devon is signing some major deals with gigantic firms he’ll be announcing soon. Full disclosure: I am a shareholder in AssetLink and have been formally advising Devon since last summer. Earlier this spring I got to watch him introduce AssetLink to a room full of VCs at the Google for Startups Black Founders demo day.

We met with Arynton Hardy, an advisor who brought his practice to Savvy Wealth and is now in the process of building out a full-scale AI product to help organize client data and manage communication workflows. As an advisor, Arynton has a first-person experience with the pain points his tool is meant to address. Sometimes you have to live through a problem in order to truly come up with the best possible fix.

I also met with Jason Jacobs, formerly of Marcus at Goldman Sachs, who is building an AI-powered onboarding tool to help advisors bring new clients on faster and more efficiently than the current labor-intensive industry standard. You can reach him here.

I’d also like to mention we have an investment in Jon Stein’s AI startup for advisors called Warmer. If Jon’s name sounds familiar, he is the founder of Betterment. I haven’t personally seen Warmer yet so I will write about that another day.

Most of the companies I’m linking to above are in their infancy and pre-revenue. Several of them have raised seed or angel money but it’s still so, so early. Nobody owns their category yet. Kings (and queens) will be made, but it will be awhile. Which for me is exciting. My firm’s venture fund, Compound Capital - led by PM Michael Batnick - has a few chips on the table. We’re being pitched all the time. We’re still looking at everything and talking to everyone. It’s a momentous time to be in the space with capital, influence and expertise.

But we don’t know how this will all shake out yet. No one else does either. So, I guess, stay tuned.

If you arer a financial advisor or you work in wealth management, don’t play yourself. Make sure you’re signed up for our advisor distribution on The Unlock. Apply here.

Apple WWDC Reaction

Michael Batnick and I went through the notes and reactions from this week’s massive Apple WWDC and give you our take from an investing perspective. We also talked about why rising stock market concentration is actually a positive for bull markets and so much more. Please enjoy the show!

You can also listen to the episode on The Compound and Friends podcast if you’re multi-tasking us. Totally fine 🙂.

Okay, that’s it from me today - hope you’re having an awesome week! Talk soon - Josh