Many high net-worth clients are getting comfortable with artificial intelligence as an investment decision-maker, although age is a factor. 

The age of prompt. That seems to be where we are at. Chat GTP and other generative AI tools are creating a plethora of new professions almost weekly - everything from highly sought-after prompt engineers to prompt creators.

With that, the prompt artist and even prompt influencers are probably not all that far off as part of our collective future, while the finance sector is more than likely to have any number of prompt-based client-facing staff on their payrolls any day now.

Little Problem

There is one city where clients seem to have little problem with all of this in the wealth management space. And that is Singapore.

A survey by global tech and management consultancy Capco released recently shows just how comfortable they are. Over three-quarters (76 percent) of those under 35 were ok with AI guiding wealth management decisions while about 42 percent of those 45 or older were.

High Levels of Comfort

When both age brackets were considered together, 59 percent of Singaporeans were comfortable with having that kind of guidance, and 15 percent were even «extremely comfortable». 

Only 13 percent were uncomfortable with the idea at all. Of that total, only 8 percent below the age of 35 «felt any degree of discomfort» while 19 percent of those above 45 did.

Receptive to AI

Although there is a clear generation gap between the two, one of the interesting takeaways is that so many older clients are as receptive as they are to using AI-based tools.

Another noteworthy finding from the survey is that although they have a high degree of comfort with the idea of AI, three-quarters of respondents are not yet even using robo-advisory services even though almost half said it was likely they would «likely» start doing so and 17 percent «very likely».

Not Yet Clear

That is altogether perplexing but it raises an interesting question. The intersection of AI-based investment guidance and robo-advisory is by no means clear or set in stone, but it seems that the survey respondents are theoretically interested in the idea of having AI-guided decision-making - but that the rubber has not met the road.

Until then, there are any number of significant milestones on the way to generative financial nirvana. An AI-guided investment advisor for wealth management will require local regulatory approval. It must also meet all related suitability guidelines and other investment restrictions. Given that, it is entirely unclear whether the result of all that will be different from what a robo-advisor currently does.

No Money Lost

Beyond that, there is another important question that needs answering. Not one wealth management client in the city-state has yet lost – or gained – money because of an AI-guided decision.

The moment they do, those perceptions are apt to change for better or worse, particularly if clients don’t make as much in the way of returns as they had expected, or worse, they lose a meaningful portion of their investments.

Letters of Complaint

That in and of itself also raises any number of considerations about what kind of rationale should be used for complaints that are sent to the regulator because the answer from the average bank is more than likely going to be some version of «the AI did it». And we are not even going to try to assess the legal ramifications of all that here.

Although many of these are challenges that every wealth manager constantly faces, it might all get very different when only a well-trained computer sits on the other side of the equation.

The Capco survey sample size was 500 with an investable asset threshold of $100,000. About 3 percent of those polled had more than $30 million in investable assets, 7 percent had between $5 and $30 million, a quarter between $1-5 million, and 65 percent $100,00 to $1 million.

The gender breakdown of those surveyed was 60 percent men, 39 percent women, and 1 percent other. The age breakdown was 19-24 (12 percent), 25-34, 35-44, and 45-54 (24 percent each), and 55-64 (16 percent).