AI, Wealth Management and Retirement to Grow in 2024

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Generative artificial intelligence (AI), cybersecurity concerns, inflation, and the convergence of retirement and wealth management are among the leading retirement plan strategies this year that are expected to not just change the industry, but evolve it, according to a new 2024 Financial Trends Report by MarshMcLennan Agency.

With AI gaining even more traction in 2023, the report predicts the technology will disrupt the finance industry within the next years, to the point where it can personalize investment recommendations, analyze market data, and propose new trading strategies by simulating different scenarios. It sites a past Boston Consulting Group report, which forecasts that generative AI strategies will be integral for organizations aiming to be industry leaders in the next five years, and even more so when paired with human expertise.

“While AI can provide valuable insights and automate aspects of financial decision-making, the guidance of a skilled financial advisor remains invaluable, MarshMcLennan writes in the report. “Financial advisors bring a deep understanding of an individual’s unique financial goals and life circumstances, allowing them to tailor AI-generated recommendations to the client’s specific needs. They provide a crucial layer of human oversight, ensuring that AI-driven decisions align with a client’s long-term objectives and risk tolerance.”

New cybersecurity concerns

With the growth of AI comes a surge of possible cyber threats, notes the report. Capabilities like personalized investment recommendations and data analysis could be exploited by cyber hackers to target participants. These hackers can then launch phishing attacks, fraud schemes, and AI-generated fake news about financial markets to further attack participant retirement accounts, MarshMcLennan adds.

The report emphasizes how working with a retirement plan advisor can help protect against fraud and cybersecurity concerns. According to the SEC, retirement advisors must take “appropriate measures to safeguard customer accounts and prevent account intrusions; oversee vendors and service providers; address malicious email activities; respond to incidents; and manage operational risk resulting from work-at-home employees.”

“Retirement advisors are well-versed in the intricate security measures necessary to safeguard your employer-sponsored retirement plan,” MarshMcLennan adds. “This ensures that your employees’ hard-earned savings are shielded from malicious cyber threats and fraudulent activities.”

Inflation disturbs retirement savings

The data on how inflation has impacted participant retirement accounts is extensive, with reports continuing to show its effect on employees. MarshMcLennan’s report draws findings from a U.S. News survey, which found that 41% of Americans paused their retirement fund contributions in 2022 due to the market while 32% withdrew a portion of their retirement savings to afford rising living costs.

Yet, the passing of SECURE 2.0 in December 2022 allowed for employers to offer benefits that mitigate this financial stress, including emergency accounts, student loan matches, and expanded eligibility for part-time workers, among other provisions.

Wealth management and retirement unify

With a rising demand in comprehensive financial guidance, more advisors are extending their retirement services towards holistic offerings that include wealth management, and acquiring businesses that provide such services.  

“As individuals increasingly emphasize comprehensive financial guidance, financial advisory firms are broadening their offerings to cater to this demand,” MarshMcLennan concludes. “This transformative shift is not merely a conceptual change. It is actively altering the services provided, empowering individuals with the tools and knowledge to navigate their financial future successfully.”

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