AI in Wealth Management: Morgan Stanley Outpaces Goldman Sachs

Infotrading.io - In an increasingly digitized world, banks are making strategic maneuvers to adapt and thrive. One such vanguard in the industry is Morgan Stanley, which has turned to Artificial Intelligence (AI) to offer a superior experience in wealth management for affluent clients. By partnering with OpenAI, the creators of ChatGPT, the bank is looking to enhance client-advisor interactions dramatically.

This comes at a time when Goldman Sachs is reorienting its wealth management division, focusing on ultra-wealthy clients and pondering the sale of a division dedicated to high net worth individuals. How do these divergent strategies set the two banks apart in leveraging Artificial Intelligence in Wealth Management?

Morgan Stanley's Gamble on ChatGPT

The collaboration between Morgan Stanley and OpenAI involves the use of an AI-powered chatbot, ChatGPT. This chatbot listens to conversations between clients and their financial advisors, seeking ways to optimize the interaction. According to Morgan Stanley’s Chief Information Officer, Sal Cucchiara, human financial advisors still remain at the core of wealth management, but the chatbot aids in administrative tasks and offers deeper insights.

The project was not an overnight effort. After extensive testing involving 1,000 financial advisors, the bank saw significant promise in integrating AI into its services. The technology has also proven its worth, as Morgan Stanley's net revenues have increased by 16% in Q2 2023, and the new client assets grew by a staggering $90 billion.

Goldman Sachs' Different Route

Goldman Sachs has taken a different approach. The bank is contemplating selling a part of its wealth management division focused on high-net-worth clients to concentrate more on the ultra-rich. Despite acquiring United Capital Financial Partners in 2019 for $750 million to expand its client base, the division remains a minor part of Goldman’s overall wealth management portfolio, which manages $1 trillion in assets.

Conclusion

Artificial Intelligence in Wealth Management is a rapidly growing field, and Morgan Stanley's partnership with OpenAI sets a new standard. While Morgan Stanley leverages AI to augment the roles of human advisors, Goldman Sachs is trimming down to focus on ultra-rich clients. It will be intriguing to observe how these divergent paths affect the two banks' competitive standing in the long run.