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A Changing Financial World: Artificial Intelligence – Forbes

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Written by Jason Katz, Private Wealth Advisor and Managing Director at UBS Financial Services; and Jordan Ricciardi, Senior Wealth Strategy Associate for Katz Wealth Management UBS Financial Services
As the financial landscape evolves at a rapid pace, one of the most transformative forces reshaping investment strategies and market dynamics is artificial intelligence. From enhancing portfolio management to revolutionizing market analysis, AI is on track to have a profound impact on how financial advisors navigate the complexities of the stock market on behalf of their clients. AI may not only impact the profitability of technology companies developing AI but investors as well.

A breakthrough that stuck with me recently is Artificial Intelligence is able to process a research article and within a second offer a buy or sell rating on the companies impacted by the research. As this type of analytics becomes more widespread, the price disparities in stocks could become less obvious and finding opportunities more challenging. While this seems disheartening, as a Financial Advisor the main part of my job is far beyond beating the market. I seek to be a one stop shop for my clients whether its financial plans, 401k’s, asset management, or retirement planning.
With that being said, if you can’t beat them join them. By leveraging AI-driven analytics, Advisors are able to advance their ability to watch market movements, evaluate risk and suggest portfolio adjustments to seek optimal returns. A data-centric approach can allow for more strategic and informed choices, potentially improving returns and mitigating risks in a more dynamic fashion.
From my understanding, AI will not be siloed to large cap tech, it instead will likely impact many industries and the first companies to adopt AI may stand to benefit the most. According to the US Census Bureau’s recent Business Trends Survey that tracks AI adoption across 1.2 million firms in the US, between 5.4% and 9% of firms are already using some form of AI as of the first quarter. This compares to between 3.7% and 4.5% last year. At this rate we could see almost all companies using some form of AI in the next 10 years.
AI demand in 2023 was mostly led by AI GPU computing and the hyper scaling of big tech customers. While big tech continues to aggressively spend on AI, we now see clearer signs of AI demand becoming more ubiquitous. During the recent GPU Technology Conference, a major semi maker highlighted how sovereign entities and major countries are becoming key sources of incremental demand. AI will likely impact a variety of sectors aside from technology, including infrastructure, utilities, and healthcare.
Some of the biggest risks that come with artificial intelligence are lack of transparency, misinformation, and security. When I speak to my clients, I make sure to mention the risks that come with relying too heavily on AI. The National Cyber Security Center which is part of UKs Government Communications Headquarters (GCHQ) stated “The rapid development of novel Artificial Intelligence (AI) tools will lead to an increase in cyberattacks” (Source: Reuters – January 24, 2024). I believe it’s important to invest in AI but never be too oversaturated where negative news could significantly impact my client’s portfolio’s.
As artificial intelligence continues to reshape the financial industry, financial advisors are presented with unprecedented opportunities to enhance portfolio management, deliver personalized investment solutions, and navigate market complexities more effectively on a risk adjusted basis. By embracing AI-driven technologies, financial advisors can position themselves to better serve their clients, adapt to evolving market conditions, and drive sustainable long-term growth in client portfolios. However, it’s essential for financial advisors to approach AI adoption thoughtfully, ensuring that technology complements their expertise and client-centric approach to wealth management. Ultimately, the core tenants of financial advice remains that you never want to be overconcentrated and should consider the risks associated with new technology and the kinks that may still need to be worked out.

The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of UBS Financial Services Inc.
As a firm providing wealth management services to clients, UBS Financial Services Inc. offers investment advisory services in its capacity as an SEC-registered investment adviser and brokerage services in its capacity as an SEC-registered broker-dealer. Investment advisory services and brokerage services are separate and distinct, differ in material ways and are governed by different laws and separate arrangements. It is important that you understand the ways in which we conduct business, and that you carefully read the agreements and disclosures that we provide to you about the products or services we offer. For more information, please review client relationship summary provided at ubs.com/relationshipsummary, or ask your UBS Financial Advisor for a copy.

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