The wonders of artificial intelligence and machine learning may go over the heads of seniors and retirees who may throw up their hands and think it’s all a young person’s game. Moreover, AI tools can have a dark side, for example, impersonating the voice – or even a video facsimile – of a loved one or a grandchild. And yet, according to high tech executives, investment managers, and financial planners, seniors will greatly benefit from the advances in AI, without ever needing to know it’s working for them.
“The risk to seniors is astronomical, we see it every day with our clients,” said Tyler End, co-founder and CEO of Retirable, a New York City-based financial technology company specializing in retirement planning and investment. But the thing that gets us very excited beyond servicing cost reduction is using AI to build in all of the spending data that we have on clients and healthcare claim data, and so on.
“If we can be smarter about when we expect expenses to flow through on the healthcare side, and deeper understanding of where clients are spending their money, how they’re spending it, where the opportunities are for decreasing it, we can enable much smarter financial planning and investing decisions, which is at the core of everything we do.”
End was speaking at a recent symposium of the Employee Benefit Research Institute (EBRI) and the Milken Institute on “Innovations and FinTech Developments That Can Enhance Financial Security, Retirement Planning, and Spending Down Assets.”
Fighting fraud a top priority
Fighting fraud was a top priority of the Fintech executives on the panel who sang the praises of AI’s ability to ferret out fraud, which is costing seniors an estimated $28 billion a year.
“A big way that we use AI is around fraud,” said Kevin Nazemi, founder and CEO of Charlie Financial Inc., a banking services firm for the 62+ crowd. “In particular, we try to get signals that pertain to this audience and make sure the activity of our clients matches up with the activity of a typical retiree.”
For example, Nazemi said, a typical retiree will fill up their gas tank less often than a regular working American; they eat out little less often and a little earlier than the general population. Those behavioral patterns can be analyzed at light speed with machine learning tools and prevent fraudulent transactions from happening before they start.
“The behavioral signals that exist oftentimes involve when a transaction is taking place and how quickly the information is typed into a device as well as the location of that transaction,” he said. “So, we have a model that’s constantly learning and analyzing the action that’s being taken and matching it up with this general population we serve. And if it doesn’t match, then we want to, in a very seamless way, prevent that transaction from happening.”
Financial planning application of AI
“We work with retirement advisors, that’s our audience,” said Yon Perullo, CEO of RiXtrema Inc., a financial planning software company for financial advisors. “We help customers interpret and understand the plans. Our large language models can understand specific information on the risk management side, and on the retirement advisor side. Really understanding the specifics of the plan is important. If you ask ChatGPT something about a specific retirement plan, it doesn’t know anything. It requires training and programming, and we’ve done that.”
Despite the benefits of AI including the ability to seamlessly and realistically interact with customers, respond to their questions, and even recommend strategies, Retirable’s End confirms that human involvement is still the most desirable method of communicating.
“We actually believe that the human connection with an advisor is one of the most important things when it comes to financial planning and plan adherence,” he said. “So, we have real humans on the phones with clients. And thus, we need to be very efficient when it comes to servicing and money movement and financial planning.
“When we think about the use cases, we focus on reducing the servicing costs, enabling our financial planners to be as efficient as possible and spend their time doing what they do best, which is working with clients. Whether it’s helping clients build emergency savings funds in months that we know that they have lower spending to smart notes for clients, when they’re picking up phone calls, we’ve been really efficient in leveraging the technology.”
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at email@example.com.
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