In the fast-paced world of financial advising, staying ahead of the curve means leveraging the latest technologies to make smarter, more informed decisions. One of the most transformative technologies reshaping this industry is artificial intelligence (AI). From predictive analytics to personalized client interactions, AI is revolutionizing how financial advisors operate. However, as data becomes more abundant, Decision Intelligence (DI) is emerging as a crucial trend in the wealth management industry. The trend has been driven by the increasing need for data-driven decision-making and the limitations of traditional data analytics and AI approaches in providing actionable business insights. In this post, we’ll take a look at what industry analysts are saying, what DI actually is, and how DI may affect the day-to-day work of wealth managers in the near future.
The buzz around decision intelligence
Decision Intelligence has been highlighted as a key trend by major consulting firms and industry analysts. Gartner identified DI as a top strategic technology trend, emphasizing its role in transforming decision-making from an abstract concept into a measurable business process. This paradigm shift involves using AI and analytics not just for data insights but for improving specific management decisions.
Similarly, McKinsey noted a growing demand for personalization and efficiency in investment management.1 Wealth managers are increasingly offering customized, tax-efficient managed accounts and direct indexing, which are becoming more accessible to a broader range of clients. Decision intelligence systems use Machine Learning models to analyze vast amounts of client data, uncovering unique patterns and preferences. This allows financial advisors to offer highly personalized recommendations based on individual client profiles.
Accenture reported that many wealth managers see significant potential in AI and DI to enhance client engagement, product offerings, and operational efficiency. However, a major challenge remains in scaling these solutions across enterprises. The report emphasizes the necessity of integrating AI into the decision-making process to potentially achieve exponential growth and competitive advantage.2
These sources underscore that Decision Intelligence is not just a buzzword, but a crucial competitive strategy for wealth management firms. It enables firms to move beyond traditional data analysis to a more integrated approach that can enhance decision-making processes, providing clear, actionable insights that have the potential to drive better client outcomes and operational efficiencies.
How decision intelligence is transforming wealth management
While decision intelligence is a form of AI, DI is an interdisciplinary field that combines data science, social science, and managerial science to design, model, align, execute, and monitor decision models and processes. DI aims to turn complex data into actionable insights, thereby improving the quality of decisions and potential business outcomes.
The wealth management industry is built on the foundation of many decisions. DI has the potential to transform the decision-making process by enabling advisors and firms to make more informed and strategic decisions. Wealth managers can use DI tools to analyze vast amounts of financial data and client information, providing personalized advice and improving client satisfaction.3,4
For example, by analyzing historical data, DI can help predict future trends and behaviors, allowing advisors to anticipate client needs. Models like Wealth Account Consolidation and Money in Motion use AI to identify clients likely to consolidate assets or predict cash flow changes, respectively.
This allows advisors to proactively engage with clients, offering tailored advice that aligns with their predicted financial behaviors. The result? Improved client satisfaction and stronger advisor-client relationships.
Decision intelligence is the tip of the iceberg for wealth management
By utilizing DI, wealth management firms have the potential to achieve a competitive edge through enhanced decision-making capabilities, leading to better client outcomes and business performance. But from our perspective, DI is really just the tip of the iceberg. Envestnet is focusing on AI and machine learning methods on behalf of our customers to:
- Generate more/better predictive insights
- Connect insights for improved context/data exploration
- Explain insights for trust and transparency in model results
- Introduce chat functionality for diagnostic and prescriptive questions: why, multi-variate factors, and what-if simulations
A big part of our approach is to enable intelligent decision making for firms without requiring them to build new systems or grow data science capabilities.
Envestnet is transforming the future of advice. Learn more about how we’re leveraging DI and machine learning at https://www.envestnet.com/data-intelligence
