Artificial intelligence is actively being implemented in the wealth management industry, as more than half of firms in a recent survey said that they are currently using or developing projects to use some form of AI.

Wealth management firms are delving into AI to help save time, reduce errors and eliminate duplicative processes, according to research from financial technology consultant F2 Strategy, but the applications of AI currently available to them do not match their expectations of transformational, streamlining solutions.

Most technologists—and most wealth management firms—have come to view artificial intelligence as inevitably impacting the way money will be managed . While it’s less clear what the impact will look like as the technology matures, F2 Strategy asked investment advisor, wealth and asset management firms what they thought about AI, uncovering four prevailing trends.

AI Is Here—Right Now
According to F2 Strategy, over half of wealth management firms, 51% of its survey, currently have an AI project in the works. One-in-four firms are using predictive analytics, optical character recogniton (or OCR, AI that can “read” documents), or both.

But before AI solutions can be effectively applied, firms need to address gaps in their data processes and management, said F2 Strategy, because successful AI implementations hinge on data quality.

Reality Does Not Match Aspirations
Today, firms are not yet applying AI to streamline their business in the ways that they would like to. For example, while many implementations of AI-like technology are currently concentrated around predictive analytics, wealth management firms are more interested in the long-term benefits workflow automation and generative, according to F2 Strategy.

“Start small,” said the report. “Understand your potential use cases and assess where AI can help your firm streamline functions to realize cost or time-saving efficiencies.”

The Industry’s Knowledge Lags
For the financial services industry, AI comes with more unknowns than knowns. When asked to rate their knowledge of AI on a scale of one to 10, 62% of wealth management firms in F2 Strategy’s survey rated themselves a five or less.

To increase their knowledge and use of emerging technology, firms should appoint an internal team member to be an “AI champion,” said F2 Strategy, who can study the solutions that exist, the regulations that limit the applications of AI and promote solutions appropriate for the business.

Don’t Go It Alone
Only 8% of the wealth management firms in F2 Strategy’s survey planned to develop their own internal firm AI capabilities, while 18% planned to rely entirely on vendors. The remaining 74% intended to take a collaborative approach, developing some resources internally while leveraging third-party vendors elsewhere.

For its survey, F2 Strategy surveyed 39 RIA, wealth management and asset management firms representing $6 trillion in assets in August and September 2023.