top of page

Updated: Jun 2, 2022

Playing by the Rules: Using Artificial Intelligence to Ensure You Remain Compliant

In the United States, regulatory agencies have consistently worked to protect investors from fraud, placing a high amount of pressure on financial advisors to remain transparent and ethical. Over time, the body of regulation continues to grow, meaning that financial institutions are devoting more time and resources to compliance.

To provide some context, Open Secrets reported that 1,371 financial institutions lobbied the Dodd-Frank bill during its legislative process, and following the implementation of the “Conflict of Interest Rule” on fiduciary investment advice, the Department of Labor (DOL) reported 3,134 letters commenting on the rule from stakeholders. It is clear from the numbers that compliance is an increasingly important issue in the wealth management industry, especially as more and more consumer information is stored online in the cloud. Financial advisors need to maintain their clients’ trust.

The Securities and Exchange Commission also makes data regarding financial advisors’ track records available to the public, meaning that through tools such as Broker Check, investors can complete checks on advisors’ reputations and make informed decisions when it comes to who they trust to invest their wealth.

Artificial intelligence (AI) should be leveraged to provide wealth management firms with access to the most recent legislation. Imagine not only being able to inquire as to the most recent rules and regulations, but a virtual assistant that can actually alert you if a specific trade or decision is going to be non-compliant. We at CogniCor want to provide wealth management firms with virtual assistants that will assist their advisors when it comes to compliance to save time, money, and avoid litigation down the road.

Artificial intelligence can be leveraged to assist service centers and advisors themselves with sifting through obsolete data and understand the most recent and up to date rules to follow. Between the Securities and Exchange Commission and FINRA, a government-authorized not-for-profit organization that oversees U.S. broker-dealers, there is a myriad of information online regarding best practices, licensing, and statistics on advisors’ track records. Advisors should take advantage of AI to organize the data and ultimately ensure they are working in their clients’ best interests at all times.

Specifically, it could meaningfully enhance the search, access and ease the adoption of rules/regulations by all players in the ecosystem. The cost of compliance could meaningfully reduce as a result of uniform taxonomy - a benefit that could well be passed on to investors.

AI can help represent the taxonomy using ontology/knowledge graph tools. Delivery of uniform content within a digital assistant platform for investors, brokers/advisors and other partners would allow for easy access and checks. The capability set could automatically check compliance for any firm large or small, and even proactively alert the existence of a regulation associated with an activity such as distribution.

The phenomenon is not something we’ve invented - what is termed ‘regtech’, the use of technology to ensure regulatory compliance, is something that large financial institutions have been seeking to harness given the amount of savings it can provide. According to the Global Trade Review, in the United Kingdom, regtech could save financial institutions up to £2.7 billion annually if they were to take advantage of artificial intelligence in anti-money laundering systems alone. Imagine the savings that could be had by investing in cognitive virtual assistants that are experts in financial regulation and constantly being updated and renewed in real-time.

Not only can virtual assistants assist advisors with ensuring regulatory compliance, but they can actually help firms affect regulation as it is being formed. The time and resources saved by implementing a virtual assistant mean that your firm can dedicate said resources to research and time on the hill, influencing decision-makers through lobbying rather than spending time and energy trying to stay on top of the legislation as it is passed. Firms need to invest in order to get the best results for the time they spend dealing with regulatory issues.

Contact us today to learn about how CogniCor's solutions can assist with your practice's compliance.

Of the few things that will shape the future of the financial services/ wealth management industry, the need for an improved investor (customer) experience (CX) ranks right at the top. Investors are used to being treated to an impeccable experience in all other aspects of their lives and will expect more or less the same from wealth management firms. How can firms manage the customer experience ripple effect?

Disruption in the wealth management sector has long been in the cards and the influx of technology startups into the market has compounded the challenges for established players. They will now have to empower financial advisors with tools that will drive better engagement with leads or existing clients.

Heightened Competition

Pressure from new entrants who leverage digital technologies including AI to offer cost-effective and holistic solutions to investors is very much evident in the market. Automated investment management solutions like Betterment are gaining traction. Thematic investment platforms are improving investor engagement and offering them new and relevant value propositions. How have the established players responded to this?

The traditional players have responded back with similar services. But the biggest casualty of digital disruption is that it has taken a toll on the advisor commissions. This has put the financial advisors under a lot of pressure. According to Deloitte, investors increasingly feel they are capable of handling their own portfolios with access to new digital platforms. With the rise in competition, wealth management firms need to empower financial advisors to be more efficient and effective at work.

According to, “Almost 60% of executives surveyed said that expertise with technology will be highly important for wealth managers to succeed. That’s because technology experts understand how technology can make routine processes, such as onboarding, more efficient.” This isn’t just theoretical, either.

Figure 1. Firms introducing new technologies are disrupting expectations of performance:

Focus on Client Relationships

Financial advisors play a major role in the distribution of investment products. Investors are constantly in touch with their financial advisor and digital transformation should rightly start with them. Whereas in the past, investors would spend time with their financial advisor out on the golf course or at the country club, now, due to greater constraints, many advisors have lost that personal contact.

There are two major challenges that every financial advisor faces which can make their work more difficult. Being an information-intensive industry, financial advisors spend most of their day searching for the right information. In addition, most of their day to day activities involve repetitive and mundane tasks.

CogniCor’s AI-powered digital assistants solve both of those problems. Not only do they make information accessible and easy to obtain in real-time as needed, but they are able to automate standard tasks so financial advisors can get back out on the course to spend valuable time with their clients. We want to use state of the art technology to help financial advisors get quality time with their clients back, and our experience proves that through the automation of standard procedures, it is possible.

Specifically, our recent deployment of a proprietary virtual assistant (VA) built for the largest independent broker-dealer in the United States has proven extremely effective for both subject matter experts (SMEs) and financial advisors alike. SMEs interact with the VA to retrieve industry and company-specific information in real-time without the need to conduct any kind of search. This reduces call times and increases productivity overall.

Technologies are freeing advisors from repetitive tasks so they’re able to spend more time providing specific insights based on what each customer wants to do. This way advisors can be more proactive, and actively coach their clients throughout their lifetime to ensure they are able to meet their financial goals from the cradle to retirement. Ask us to learn more about how digital assistants can empower financial advisors, and be sure to check out CogniCor CEO Sindhu Joseph’s recent webinar on Accelerating the Productivity of Financial Advisors with Digital Assistants for more details.

Authors: Kathryn Bouchard, Sharhad Haneef

CogniCor Co-founder & CEO Dr. Sindhu Joseph and Head of Customer Experience Rajesh Sharma presented the company’s latest offering for the wealth management industry at InVest 2019 which was held in New York on Tuesday, July 16, and Wednesday, July 17, 2019. At the most anticipated digital wealth event of the year, CogniCor showcased how AI-powered digital assistants can help the wealth management industry, which is facing challenging times. Mounting pressure triggered by rising customer expectations, lower revenues, a tightening regulatory framework and increasing competition from digital investment startups are all forcing wealth management firms to reinvent themselves in the age of experience. CogniCor’s presentation encapsulated how digital assistants can help in crafting an exemplary customer experience, how they can boost financial adviser productivity and also how they will revolutionize advisory delivery. The event was attended by more than 1500 executives from the industry. Click here to read more.

bottom of page