4. Large document analysis
Think of how often you need to read and analyze large documents. Advisors are using AI to help. Kolb points out that Adobe offers users “AI Assistant,” which can summarize large PDFs and spot differences between two PDFs.
There are also apps built specifically for financial professionals. These include FP Alpha, Holistiplan, Vanilla and Wealth.com. Historically, many of these companies have focused on and branded themselves in one of three areas: tax, insurance and estate planning. All three involve large documents such as tax returns, insurance policies, wills, trusts and POAs (power of attorney). But because the underlying function is the same — analyze a large document — more of these companies are trying to offer one-stop solutions.
Kolb and Michael Schmid, a senior financial planner with Capital Group’s Private Client Services group, have both used tools in this category. They both say AI’s ability to quickly read and analyze large documents is a big time-saver. It can extract text from a document, then provide recommendations based on the data.
It’s worth noting that the technology powering these apps isn’t always AI. Text extraction, for instance, is usually done by optical character recognition (OCR), which predates AI. The recommendations that some apps provide are generated by rules-based systems, not AI; if the app reads something in the document, it offers the corresponding recommendation.
This highlights the importance of starting with a problem and finding the solution, not the other way around. As Schmid puts it, “The important thing isn’t what AI can do. It’s all about what we do for clients, then how tech helps us do that. Whether it’s AI or something else.”
As always, keeping a human editor in the loop is critical. Schmid recalls an instance of an app recommending that a client who works as a freelance writer form a C corp, which he felt didn’t make sense for that individual.
Kolb observes another downside with these tools. “I think that AI struggles analyzing your qualitative datapoints,” he says. “How do you analyze a management team as AI, and more importantly, how do you analyze it from the perspective that you want?”
Out of the three areas that document extraction tools focus on, tax planning has historically been the most crowded with software providers and offered the most opportunities for advisors to use AI.