Morgan Stanley Develops AI Super Agents to Build Portfolios and Manage Client Accounts
From the desk of Jim Eccleston at Eccleston Law
Morgan Stanley is developing AI-powered "super agents" that could eventually build investment portfolios, manage client accounts and handle many of the routine tasks that wealth management professionals perform today. The initiative reflects the firm's broader effort to move beyond AI chatbots and introduce technology that can carry out complex tasks with limited human involvement, Financial Planning reports.
Speaking at the UBS Financial Services Conference in Key Biscayne, Florida, Morgan Stanley wealth management head Jed Finn said the firm is building super agents that will combine "hundreds, if not thousands" of smaller AI agents. Financial Planning reports that the technology will initially handle tasks such as answering client questions, opening accounts and moving money. Eventually, it could also construct investment portfolios.
Finn expects advisors working with new clients to be able to ask an AI agent to build a portfolio using Morgan Stanley's available investment options. The agent could account for virtually any criteria an advisor specifies, including asset allocation, historical performance, back-tested results, expense ratios and Sharpe ratios.
Portfolio construction presents a particularly significant challenge for wealth managers because AI-generated recommendations involve client assets and raise regulatory concerns. Finn said Morgan Stanley will retain human oversight. Advisors will review and approve AI-generated recommendations before the firm implements them.
The announcement came the same day that financial software firm Altruist introduced an AI system designed to help clients reduce their tax burdens. The launch triggered concerns about AI's potential impact on traditional wealth management businesses. According to Financial Planning, shares of Charles Schwab, Raymond James Financial, LPL Financial and Stifel Financial declined following the announcement.
At Morgan Stanley, some agents will function as virtual assistants to client service associates. Rather than simply retrieving information like conventional chatbots, those systems will take action, including moving money, opening accounts and changing beneficiaries. Morgan Stanley hopes to automate routine administrative responsibilities so client service associates can spend more time interacting with clients.
The firm also plans to make super agents available to clients around the clock. Initially, the agents will handle basic requests, such as providing account balances and delivering tax documents. Morgan Stanley expects to expand their capabilities to include transferring money and paying bills.
Finn acknowledged that expanding those capabilities will increase fraud risks. He said the firm plans to introduce the functions in stages because it must account for its responsibilities to protect clients and their assets. It remains to be seen how well Morgan Stanley will accomplish that objective.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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