Wealth managers play a vital role in the professional and personal lives of high-net-worth individuals, ultimately helping them get the most out of their money. Up until now, they have been mostly human – and it takes a lot of trust to hand over all your financial affairs to a fellow human. For instance, what happens if they fall ill when a prime stock suddenly takes off – or plummets – exposing you to missed financial gains or financial losses that could have been avoided. And what’s to say they won’t turn rogue and steal your money one day?

But what if you could hire a non-human wealth manager instead? Well, thanks to the rise of artificial intelligence technology, that’s now possible. Unlike human wealth managers, AI investing alternatives can work right around the clock to find lucrative opportunities and warn clients of potential market slumps that could affect their money. However, some experts warn that AI wealth managers aren’t perfect – voicing concerns around data privacy and the dissemination of inaccurate or exaggerated financial advice. Consequently, they argue it should assist – not replace – human wealth managers. So, how can AI investing tools be used responsibly and safely?

A new era of wealth management

The rise of AI is ushering in a new era of personalised wealth management products, according to Rhodri Preece, senior head of industry research at investment sector body CFA Institute. He says this technology enables wealth management firms and family offices to spot investment opportunities and risks in accordance with fast-shifting market dynamics and the objectives and risk tolerance of clients. He also claims that AI is doing these things with impressive accuracy and speed, explaining, “This means wealth investment strategies incorporating AI can be both highly bespoke and responsive to changing markets.”

As well as better understanding the unique financial needs of wealthy people, AI investing tools can also provide real-time insights into the constantly evolving financial landscape and the core industries in which investors’ interests lie. James D’Mello, head of IFA distribution at venture capital firm Fuel Ventures, explains that this is possible because AI tools use predictive analytics and machine learning algorithms that are capable of monitoring market behaviours at all times. These rich insights offer enhanced wealth protection and greater return on investment, he claims.

This sentiment is echoed by Edward Morris, founder of the prompt engineering agency Enigmatica. He explains that, thanks to reasoning models that can think like humans and the integration of advanced data analytics, AI can process “millions of variables, market signals, sentiment shifts, and behavioural patterns that the human brain misses”.

But while AI models can now replicate human thinking, Morris says they aren’t constrained by human flaws like fatigue and fear – which often lead to bad investment decisions. He tells Luxury London: “AI doesn’t panic when interest rates spike or when inflation comes knocking.”

The space is fast advancing, too. In the foreseeable future, agentic AI – automated systems that can make decisions and perform actions without users’ input but in line with their goals – will have a profound impact on wealth management. Fraser Edwards, co-founder and CEO of fintech firm Cheqd, explains: “We’ll see AI agents capable of actively managing portfolios, executing trades, rebalancing assets, and adapting strategies in real-time based on both market conditions and user-defined goals.”

AI isn’t perfect

Despite their many benefits, AI wealth management tools and products come with significant risks that need to be understood and mitigated. For Morris, the most significant is placing too much trust in AI models to make investment decisions. He explains that AI hallucinations – when chatbots provide inaccurate, hard-to-understand and even fabricated information – can result in poor decision-making and, consequently, potential financial loss. What’s more, because AI struggles to understand nuance and may only learn from a small dataset, Morris says they may not provide wealthy people with the bigger picture – which, in turn, leads to bad investments.

To counter these risks, Morris says human oversight of AI wealth management and investment tools is essential. Ideally, he says two humans – one well-versed in the inner workings of AI and one specialising in wealth management – should be on hand to verify the advice provided by the AI system. Using explainability protocols like SHAP and LIME – which are essentially methods to make AI-generated information easily digestible to humans – will add extra context, too.

Like Morris, Preece raises some important ethical considerations about AI investing tools. For starters, he says any wealth management companies or family offices using AI tools on behalf of clients should be open about their usage. He says human oversight and compliance with industry and regulatory standards are the key to maintaining “trust and discretion” when using AI for wealth management.

Because AI models are trained on large volumes of sensitive information that is a prime target for cyber criminals, Preece urges wealth management firms and family offices investing in this tech to implement “robust cybersecurity and strict data governance” in order to prevent data leaks. This is reflected in industry regulations like the European Union’s Digital Operational Resilience Act (DORA), which compels financial firms to shore up their cyber defences to maintain digital resilience at all times.

Getting started with AI

For those new to AI wealth management tools, Morris says it’s important to start small and progress “slowly”. He warns against rushing to build an AI tech stack, like the Silicon Valley tech giants and major hedge funds, as this can cause feelings of panic and disenchantment when the project ultimately fails to get off the ground.

Instead, Morris recommends testing the waters with user-friendly AI chatbots like Microsoft Copilot and ChatGPT Teams for simple tasks like conducting market research, creating summaries of in-depth financial reports and writing investment rationales. He adds: “These tools are almost like having a junior analyst, except it's one that never tires.”

As wealthy people and their financial advisors become more comfortable with AI, Morris encourages them to experiment with advanced tools and products. His top choices are Kubera for smart wealth tracking, Delphi and Clea for AI-powered budgeting, and Rewind AI for communicating issues related to financial planning.

To get the most out of these tools, he says users should train them with “rich” datasets like financial goals, investment preferences and risk tolerance. He adds: “AI will only ever be as good as the context you provide.”

Wealth managers, on the other hand, can benefit from AI platforms such Next Best Action from Morgan Stanley. Preece explains that it can “deliver highly tailored investment recommendations for varying wealth profiles”. He also recommends Schwab Intelligent Portfolios as it can “build, monitor, and rebalance portfolios automatically” to ensure sound investment decisions.

Another important consideration when using AI for wealth management is to understand the opportunities and the pitfalls it presents. Edwards says AI is great for “identifying patterns, spotting emerging trends in data, and automating action based on that insight”.

However, he warns the technology will not “magically generate winning strategies”, adding that users should refrain from relying “solely on AI to manage and increase their wealth”. He adds: “You need a good understanding of the industry prior to automating your approach to it.”

He adds that wealthy people and financial advisors looking to leverage AI must remember that, while AI can automate wealth and investment management, the technology still requires them to go to the effort of supplying ample data and a clear vision to follow.

Edwards concludes: “Ultimately, AI is a tool, not a substitute for skill or experience. In the hands of a thoughtful, informed individual, it can be invaluable. But without a capable human guiding it, even the most sophisticated AI is just code.”

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