Wealth Tech FOMO: Are Top Firms Ignoring a Shocking 70% Data Risk? Find Out Now!

As wealth management firms rush to incorporate artificial intelligence (AI) into their operations, many are facing an unexpected hurdle: outdated technology systems that can't support the innovations they wish to employ. Garrett Oakley, a partner at the consultancy Alpha FMC, warns that the rush to adopt AI tools without addressing underlying data infrastructure may lead to more complications than benefits.

This year, firms have eagerly embraced AI applications—from notetaking tools to pilot projects aimed at enhancing automation and productivity. However, Oakley emphasizes that these advancements often highlight significant weaknesses in an organization’s data management capabilities. “Wealth management, at the end of the day, is professional services,” Oakley remarked in a conversation with InvestmentNews. “Every firm is trying to figure out how you become more efficient with your most expensive resource, which is people.”

The Limitations of Quick Solutions

Many firms have begun using AI notetakers, which promise rapid productivity gains without necessitating substantial changes to existing workflows or data storage practices. Oakley explains that these tools were the easiest entry point for firms looking to test the waters of AI. “Notetakers were the easiest way of dipping your toes into it,” he noted, highlighting how they can capture data during client meetings efficiently.

Yet, the benefits may be superficial. While these tools can save time on manual note entry, the insights extracted from client discussions often end up isolated in CRM systems or shared drives, contributing to a growing problem of data silos. As Oakley puts it, “It saves time, but that’s where it stops.” The ultimate goal, in his perspective, is to develop what he calls "agentic AI," systems capable of interpreting notes and automatically initiating follow-up actions—like drafting emails or updating client plans—without human intervention. However, many firms lack the necessary structured data systems to support such advancements.

“Everything comes down to data,” he asserts. “What AI is starting to expose in these early days is that the plumbing is not there.”

Many mid-sized Registered Investment Advisors (RIAs) and independent firms operate with a patchwork of tools that were not designed with a cohesive data strategy. Historically, data management has not been prioritized, leading to technology stacks centered around a few main vendors—a CRM, a planning platform, and a portfolio management system—often with only basic integrations. Oakley points out, “For the longest time, no one really asked where all that data goes.”

As firms dive deeper into the world of AI, Oakley anticipates that more leaders will face the grim reality of their outdated technology. “Foundationally, we are not ready,” he summarizes, describing clients who previously showcased proofs of concept but are now hesitant to implement solutions widely due to complex compliance and data governance issues.

Looking ahead, Oakley believes that vendors must adapt to be “integration-agnostic” and support open architectures, enabling firms to manage data effectively. “Those that refuse to connect to the broader ecosystem are the ones he sees at risk,” he warns.

For firms aiming to prepare for the next wave of AI, Oakley advises starting with an overarching plan instead of rushing into the latest tools. “It’s amazing to me how many firms just haven’t even had or don’t have an ongoing view of their own data strategy,” he reflects. “Step one is: what are we trying to accomplish, and how does our firm feel about the best path for us? Then you get to step two, which is the solve. That might include using agentic AI to normalize, clean, and maintain data.”

Firms must also resist the urge to continuously expand their technology stacks without consideration for what can be streamlined. “We continuously talk about these new technologies, but we never talk about retiring anything,” he cautions, noting that an “everything plus” mentality complicates data management.

In Oakley’s view, the industry is only beginning to tap into the potential of AI. As firms approach technology enhancements, they should consider how their processes might fundamentally change. Echoing a famous quote from Henry Ford, he states, “The real opportunity is to ask: what does the future look like outside the confines of how we operate today?”