BUSINESS NEWS - Momentum Investments Group hosted a groundbreaking webinar titled ' Minds and Machines 2024: The Future of Behavioural Finance: 2024', bringing together industry leaders to explore the intersection of artificial intelligence (AI) and behavioural finance.
The event featured prominent thought leaders in the financial and technology sectors, who all shared their insights on how AI is transforming investment decision-making and the role of human behaviour in shaping financial outcomes.
Momentum Investments Group collaborated with the CFA Society of South Africa and the Global Association of Applied Behavioural Scientists (GAABS) to present an exceptional panel of experts in behavioural science, finance, investments, psychology, and AI.
Professor Evan Gilbert, Investment Strategist at Momentum Investments Group, set the tone by highlighting the pivotal role of machine learning in modern finance.
"Machine learning and its use in finance is one of the current frontiers in this space and is one we are actively exploring at the Research Hive in Momentum Investments Group and in our collaboration with the Department of Data Science and Computational Thinking at Stellenbosch University," Gilbert stated.
He emphasised the importance of consistent decision-making across the investment value chain, noting that behavioural finance and AI are crucial in delivering desired outcomes for clients.
AI and the future of investment decision-making
Jennifer Henry, President of the CFA Society in South Africa, explored the future of investment decision-making, discussing how AI is increasingly being used to integrate behavioural science into traditional analysis.
She referenced the CFA Institute’s 2019 handbook, AI Pioneers in Investment Management, which proposed a model where AI augments human intelligence, allowing investment professionals to achieve higher levels of decision-making.
"Incorporating AI into investment processes speeds up decision-making and enables more comprehensive data analysis, ultimately leading to better client outcomes," Henry explained.
The evolving value of financial advice
Ryan Murphy, Global Head of Behavioural Insights at Morningstar, explored the evolving value of financial advice, particularly the importance of behavioural coaching. He noted a surprising disconnect between what clients seek when hiring financial advisers and where true value lies.
"Paradoxically, soft skills are the foundation for some of the best sources of financial advice, yet these capacities are not what people have top of mind nor what they articulate when they are looking to hire professional financial services," Murphy observed. He stressed the need for advisers to better understand client motivations and to tailor their value propositions accordingly.
The future of financial advice
Derek Notman, Founder and CEO of Couplr AI, focused on the future of financial advice, advocating for a client-centric model enhanced by technology. He likened finding the right financial adviser to dating, emphasising the importance of shared values and interests in building trust.
"Consumers are demanding a personalised financial guidance experience that aligns with their values, hopes, dreams, and goals," Notman said. He highlighted how AI can facilitate deeper connections between advisers and clients, ultimately leading to better financial decisions and outcomes.
Behavioural technology in asset management
Thomas Oberlechner, Founder of BehaviorQuant, presented the latest behavioural technology designed to support asset managers and advisers. Drawing from his research at Harvard and MIT, Oberlechner explained how invisible psychological and behavioural factors influence investment decisions.
He introduced BehaviorQuant’s advanced technology, which generates predictive behavioural profiles of investors, enabling more tailored and effective advisory relationships.
"These new behavioural technologies allow advisers to establish tailored relationships with their clients, optimise investment performance, and select the right fund managers," he concluded.
The future of financial services
Finally, Paul Nixon, Head of Behavioural Finance at Momentum Investments Group, looked towards the future of financial services, where AI and emotional intelligence (EQ) tools are becoming essential. Nixon described how advisers are now equipped with AI tools like Podcastle to generate personalised content for clients quickly.
He also discussed the importance of understanding clients' dreams and fears, stating, "Financial services providers have a big role to play here, supporting advisers with in-the-moment insights that help clients avoid costly behavioural mistakes."
Lessons learned and the path forward
Nixon says the key takeaway is clear: the future of investment advice lies in the seamless integration of advanced technology with a deep understanding of human behaviour.
“This synthesis not only enhances decision-making but also fosters stronger, more personalised client relationships. Moving forward, industry professionals must embrace these tools and methodologies to stay ahead in a rapidly changing environment.”
He says the lessons from this webinar underscore the need for a proactive approach to innovation, one that prioritises both the technical and emotional aspects of financial advice.
You can find out more about the future of behavioural finance, by watching the full webinar available here.
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