Latest news with #robo-advisors
Yahoo
3 days ago
- Business
- Yahoo
4 Clever (and Less Risky) Ways To Use AI for Investing
From stock bots to ChatGPT prompts, artificial intelligence (AI) is not only here to stay, but it's making its way into aspects of people's lives where it once might have seemed impossible: investing. While you probably shouldn't fire your broker or let AI make all of your investing decisions, there are some good uses for it. Find Out: Read Next: AI is especially useful if you think of it as a tool to support and supplement your investments but not to replace professional advice or other practical expertise. Here are four ways to use AI for investing that are not only useful but actually quite smart. Use AI To Automate Your Portfolio Automated, AI-driven online advisors ('robo-advisors') may not be able to give you a nuanced overview of your specific portfolio, but they can help you make some basic decisions including how to generally allocate assets, how to rebalance a portfolio or how to minimize your tax impact. From Fidelity Go to Betterment, there are many finance-based robo-advisors available to set you up with information that can help you assess and even automate aspects of your portfolio. You don't, however, want to make any big changes without first running them by a financial professional. Learn More: Use for Investing Research, but Always Fact Check One of the best uses of AI in investing is to help educate yourself, whether to define terms (dollar-cost averaging, anyone?), understand general market trends ('What's a bull market?') or summarize lengthy financial information (a company's earnings call). Tools like Morningstar's Mo or offer AI-generated answers to users' financial questions. Grounding yourself in financial terms is a great starting point for becoming a smarter investment. However, always fact check information you get from AI before you use it in any significant way. It's one thing to toss around a new investing term you learned at a party, another thing to reallocate your portfolio because AI told you to. Use To Spot Trends, but Not Predict the Future AI is a pattern-finding and analyzing dynamo, able to process millions of data points and detect trends at amazing speeds that humans might miss. However, picking out trends does not mean it can predict the future. In fact, it's notoriously bad at this, because it turns out that being able to pick a hot stock is a uniquely human trait, borne of things like instinct and experience and history as well as the trends and patterns that AI can find. This lends itself best to long-term investing strategies versus day-trading hype. Use for Risk Management One of the smartest ways to use AI in your investing strategy is for risk management, making sure you're not over-concentrated in one asset, especially a risky one. AI can take a high-level overview of your portfolio and flag potential red flags that you can either solve on your own or seek a professional's help with. Additionally, you can use AI to track your investments against market conditions to help you resist emotional decision-making — like chasing trends or holding on to underperforming assets too long. It can help you become a more strategic investor. Avoid AI Investing Mistakes You can't call your friends a tool — it's an insult — but AI won't be offended, because it is a tool. A helpful tool to fill in when you don't have a finance professional at your fingertips. Don't blindly follow AI stock picks or investing bots. All AI gives incorrect or even made up (hallucinated) information at times. Think of AI as your investing assistant, one whose work still needs checking. While it won't replace a finance professional, it can assist you in your investing goals. More From GOBankingRates 25 Places To Buy a Home If You Want It To Gain Value This article originally appeared on 4 Clever (and Less Risky) Ways To Use AI for Investing
Finextra
3 days ago
- Business
- Finextra
From advisors to algorithms: The shift in wealth guidance
From advisors to algorithms: The shift in wealth guidance 0 Editorial This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. For decades, wealth management was a relationship business. Clients used to meet their financial advisors in offices, discuss life goals, and trust human judgment to guide their financial futures. However, over the last decade, a quiet revolution has taken place: one that's replacing handshakes with algorithms and intuition with machine learning. Today, millions of people receive financial advice not from a person, but from a platform. Robo-advisors, AI-driven planning tools, and hyper-personalised investment apps are reshaping how we think about wealth, and who gets to build it. However, according to McKinsey, by 2034, 'at current advisor productivity levels, the advisor workforce will decline to the point where the industry faces a shortage of roughly 100,000 advisors.' McKinsey data shows that advice revenues have been the main economic driver for the US wealth management industry. Revenues 'generated from fee-based advisory relationships [...] have grown from approximately $150 billion in 2015 to $260 billion in 2024, and growth in the number of human-advised relationships has outpaced population growth by three times in the same period.' Amid the growing demand for advice, declining advisor head count and addressing the shortage with an advisor talent and productivity system, the quiet revolution has advocated for the recruitment of new-to-industry advisors. By improving the advisor career path for entry-level talent, there is also a clear path for new sources of talent by targeting career switchers. Recruitment will not be enough. This is where generative AI comes in. McKinsey's estimate reveals that even a '30-40% average advisor adoption of more wealth-management-specific gen-AI-enabled tools and processes across the value chain and across the full advisor population by 2034 can deliver 6-12% of time savings – and, in turn, increase advisor capacity.' From suits to software Addressing a 100,000-advisor capacity shortage will be no easy feat, especially with the first wave of robo-advisors having emerged in the early 2010s, offering low-cost, automated portfolio management. They were simple, rules-based systems, efficient, but impersonal. Fast forward to 2025, and the landscape has evolved dramatically. Modern AI-driven platforms don't just rebalance portfolios. They analyse behavioural patterns, anticipate life events, and tailor advice to individual goals, risk appetites, and even emotional states. What began as a cost-saving tool has become a sophisticated engine for personalised wealth guidance. As Sébastien Payette, director consulting expert, financial services, CGI, writes, robo-advisors are becoming an 'integral part of investment strategies for both retail and high-net-worth (HNW) and ultra-high-net-worth (UHNW) investors.' He points to three key trends: 'Hybrid advisory models – Traditional financial institutions are incorporating robo-advisors alongside human expertise, offering a blend of automated technology and personalised, face-to-face financial guidance. Hyper-personalisation – Advanced robo-advisors utilise AI-driven insights that integrate financial market data with investors' digital footprints, tailoring investment strategies to unique financial goals, risk appetite, and life stages. Diversified asset offerings – Robo-advisors are expanding beyond equities and fixed-income products to include alternative investments such as derivatives, real estate, private equity, and cryptocurrencies, broadening the scope of automated wealth management.' What AI does better Payette also explains that smarter AI and predictive analytics through robo-advisors 'will leverage even more advanced AI capabilities to predict market trends and mitigate risks, leading to increasingly optimised portfolios and investment strategies.' AI's appeal lies in its speed, scale, and objectivity. It can: Monitor markets and portfolios in real time. Optimise tax strategies across multiple jurisdictions. Detect behavioural biases and nudge users toward better decisions. Offer 24/7 access to insights, no appointment necessary. For younger investors and the mass affluent, these tools offer something traditional advisors often couldn't: accessibility. With lower fees and intuitive interfaces, AI has opened the door to wealth planning for millions previously priced out of the conversation. As the World Economic Forum states, 'large language models (LLMs) are still evolving. They are expanding beyond robo-advisors, progressing from chatbots to assistants to agents, reducing the advice gap for retail investors. 'The essential question is can AI systems deliver the level of emotional intelligence and empathy required by investors to share information and needs in ways they do with their human advisors, i.e., could machines ever replace human advisors?' But what's lost? Despite its advantages, AI lacks something essential: human empathy. Financial decisions are rarely just about numbers. They're about fear, ambition, family, and identity. A human advisor can read between the lines, sense hesitation, and offer reassurance. An algorithm, no matter how advanced, can't replicate that, at least not yet. There's also the question of accountability. When an AI-driven platform makes a poor recommendation, who's responsible? The developer? The firm? The user? As AI takes on more advisory functions, these questions become more urgent — and more complex. Can AI wealth models be credible? Yes, by processing vast datasets with speed and precision. Agentic AI can also integrate collaboration with human experts, which strengthens the credibility of the systems. Can AI wealth models be reliable? Yes, AI is consistent and free from human error, but there are transparency concerns. LLMs can offer guidance and with modules such as retrieval augmented generation (RAG), context is enriched. Can AI wealth models be intimate? Yes, AI can recognise sentiment, but cannot offer the lived experience and cultural nuances that humans can. Can AI wealth models be self-oriented? Yes, AI can operate without personal biases, but the data its trained on or how it's deployed by financial firms may introduce conflicts of interest. Regulatory oversight may be needed to ensure AI acts in the best interests of the clients, and recommendations are not biased. The rise of hybrid models Rather than replacing human advisors, many firms are now blending the best of both worlds. This transformation or phase of the evolution requires a balanced approach that capitalises on AI systems but preserves human touch. This is how trust-based relationships can be built in wealth. These advisors can use AI to handle data-heavy tasks, while humans focus on relationship-building and strategic guidance. It's a model that promises both efficiency and empathy, and it's gaining traction fast. In conversation with Finextra in 2023, Renato Miraglia, head of wealth management and private banking, Italy, at UniCredit, says that human beings will continue to be essential in the relationship with private and wealth clients into the future, but the use of data and technology will change the analytical tools with which client materials are produced. He cites the value of generative AI to create highly personalised and detailed real-time reports and analyses on the peculiarities of each client's position. 'The wealth manager of the future will use new and sophisticated tools to analyse risks and investment opportunities – and this will improve the accuracy of financial planning. The next generation of tools consider key elements in an integrated way, taking a holistic view of factors such as the interaction with real estate or business assets, changes in lifestyle, and elements of risk that can be secured through various forms of insurance,' Miraglia elaborates. The next evolution The future of wealth guidance may not be about choosing between humans and machines, but about redefining the role of each. As generative AI becomes more conversational and emotionally intelligent, it could take on more nuanced advisory roles. Meanwhile, human advisors may evolve into financial coaches, helping clients navigate not just markets, but meaning.
Globe and Mail
14-07-2025
- Business
- Globe and Mail
Top Fintech Stocks That Will Drive Long-Term Portfolio Growth
An updated edition of the June 13, 2025 article. Fintech, or financial technology, is revolutionizing finance by making services more accessible, efficient and personalized. Digital banks and peer-to-peer lending platforms are democratizing access, especially for underserved populations, by offering low-cost, mobile-first banking and innovative lending solutions. From enabling microloans to creating instant account openings, fintech is helping to bridge the financial inclusion gap. Payments have undergone a massive shift, with fintech firms driving innovations like real-time transfers, digital wallets, UPI-based payments and low-cost cross-border remittances. Moreover, investment and wealth management have become more user-friendly through zero-commission platforms, robo-advisors and fractional investing, empowering retail investors to participate in capital markets with ease. Fintechs are also enhancing financial decision-making through artificial intelligence (AI)-powered personal finance apps and alternative credit scoring systems that use behavioral and transactional data. This not only improves user experiences but also broadens access to credit. Fast digital loan approvals, automated underwriting and data-driven insights are transforming how individuals and businesses borrow and manage money. Fintechs are also playing a crucial role in boosting cybersecurity and compliance. As traditional banks adopt fintech strategies or partner with startups, the future of finance is increasingly being shaped by agile, tech-driven innovation. For investors, this presents a compelling opportunity to tap into a dynamic, high-growth sector poised to redefine the global financial ecosystem. Hence, stocks like Visa Inc. V, BGC Group Inc. BGC and Upstart Holdings, Inc. UPST are gaining traction. Our Fintech Screen will help you identify the right stocks now to ride the wave of this trillion-dollar revolution. Leveraging advanced tools, our thematic screens identify companies shaping the future, making it easier to capitalize on emerging trends. Zacks Thematic Screens and discover your next big opportunity. 3 High-Potential Fintech Stocks Poised for Big Gains Visa 's dominant market position is driven by consistent volume growth, strategic acquisitions and digital payment innovation. Growth in cross-border volumes, rising digital transactions and investments in AI and stablecoins further strengthen its outlook. The company has adapted quickly to the digital shift. Visa Token Service secures card data for platforms like Apple Pay and Google Pay, keeping Visa central to digital payments as physical cards become less relevant. Visa is also exploring the future of money through crypto partnerships, stablecoin settlement capabilities and cryptocurrency -linked cards. With a vast global acceptance network and ties to fintechs, neobanks and tech giants, Visa remains well-positioned to evolve with financial technology trends. As fraud cases rise, Visa's AI-driven security tools are in high demand. It has embedded AI into more than 100 products—mainly for fraud prevention—and invested $3.5 billion in modernizing its data platform. This helps the company block more than $40 billion in attempted fraud annually. Visa's strategic focus on innovation, digital integration and cybersecurity gives it a strong edge for long-term, sustainable growth. The Zacks Consensus Estimate for V's fiscal 2025 sales and EPS implies year-over-year growth of 10.3% and 12.9%, respectively. The stock carries a Zacks Rank of 2 (Buy). BGC Group is a global financial services firm specializing in brokerage and financial technology. It offers both voice/hybrid and fully electronic brokerage services, facilitating trades in complex financial instruments like fixed income, foreign exchange and derivatives. Its proprietary Fenics platform powers the company's electronic trading operations, enabling faster, more efficient transactions. This positions BGC Group at the forefront of digital transformation in capital markets. At the core of BGC Group's strategy is a focus on automation and scalability through Fenics, which provides trading solutions, market data and analytics to institutional clients. This shift toward technology-driven services allows the company to enhance margins and reduce dependence on traditional, labor-intensive models. Following the 2023 spin-off of its commercial real estate arm, Newmark, it has sharpened its focus on its capital markets and fintech operations. The company's revenue model is driven by transaction commissions, technology licensing and data services. Serving a global client base, including investment banks, hedge funds, asset managers and central banks, BGC Group leverages long-standing market relationships and a hybrid service model to stay competitive. Its emphasis on digital innovation, global expansion and operational efficiency continues to support its growth in a rapidly evolving financial landscape. The Zacks Consensus Estimate for BGC's 2025 sales and EPS implies year-over-year growth of 26.5% and 18.2%, respectively. The stock carries a Zacks Rank of 3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Upstart, an AI-driven fintech disruptor, pioneered the application of AI to lending, enabling a system that is more efficient and accurate for both borrowers and lenders. Unlike traditional lenders that rely on FICO scores, the company uses machine learning (ML) to evaluate non-traditional data points, like education and employment history, allowing it to approve loans for a broader range of borrowers while maintaining strong credit performance. Upstart does not originate loans itself but acts as an intermediary, earning revenues through referral fees from lending partners, loan servicing fees and income from loan sales and securitization. Beyond personal loans, the company has expanded into auto lending and is exploring opportunities in small business loans and mortgages. This will create diverse revenue streams, strengthening its long-term potential. The company's direct-to-consumer lending platform, enables individuals to apply for loans directly, funded by partner institutions or institutional investors. Its competitive edge lies in its AI-driven approach, which speeds up loan approvals and provides access to credit for underserved borrowers. By leveraging automation and data analytics, the company aims to disrupt traditional lending and make borrowing more inclusive and efficient. The Zacks Consensus Estimate for UPST's 2025 sales and EPS implies year-over-year growth of 59.5% and 890%, respectively. The stock carries a Zacks Rank of 3. Research Chief Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months. Free: See Our Top Stock And 4 Runners Up Visa Inc. (V): Free Stock Analysis Report BGC Group, Inc. (BGC): Free Stock Analysis Report Upstart Holdings, Inc. (UPST): Free Stock Analysis Report
