IBM Watson-Infused Robo Wants to Help Advisors, Not Beat Them | Lord Abbett

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Practice Management

Most clients interested in artificial intelligence-enhanced software are in the broker/dealer and RIA markets.

This Practice Management article is intended for financial advisors only (registered representatives of broker/dealers or associated persons of Registered Investment Advisors).


IBM Watson, the computing system programmed-smart enough to provide doctors with recommendations for treating lung cancer, is now ready to assist financial planners to give advice.

After months in development, Marstone, a new robo adviser, officially launched on Pershing's custodial platform on May 11, offering institutional clients a digital advice engine powered by IBM's famed artificial intelligence system, Watson.

Though he declined to give specific figures, Marstone COO Burt Esrig said the firm is working with a significant pipeline of financial institutions, most of them Pershing custody clients, as it rolls out its Powered by Marstone platform.

The move is part of a concerted effort to develop digital advice technology into a more intelligent interface, and into a tool more designed to assist advisers rather than compete with them. IBM Watson’s cognitive computing power has already been harnessed in a variety of commercial applications, from designing gala gowns and even acting as a hotel concierge, to providing a variety of life-saving analyses for healthcare professionals.

In practice, such cognitive computing power would work with an adviser just like a helpful Star Wars droid: virtually present during a meeting with a client, gathering data, and ready to instantly assist with queries and projections, along with its own suggestions based on client data.

Last fall, BlackRock announced it was in discussions with a U.K.-based Google company to form a joint venture that would investigate how AI could be used to inform investment decisions, according to the Financial Times. Likewise this past March, Wealthfront announced the rollout of the latest version of its advice platform, which it advertised as AI.

Another wealth advice platform bolstered by sophisticated data aggregation and analytics is Addepar, which has its roots in the CIA-funded Palantir data analytics platform.

Few AI efforts, however, have the public profile as IBM Watson, which captured widespread attention after beating a panel of Jeopardy! champions.

Marstone recently announced that it was partnering with IBM Watson, the artificial intelligence system, to incorporate cognitive and machine-learning abilities into its services. The firm said it would launch two additional products—Marstone Maps and Marstone Cognitive—later this year, with Marstone Cognitive being the first digital advice product to use Watson technology.

The largest numbers of interested clients in Marstone’s offering were in the broker/dealer and RIA markets, but the wealth management operations of banks also had significant assets that were going digital, Esrig said.

Esrig said it was too early to tell how Marstone’s strategy would differ from Wealthfront or a potential BlackRock-Google venture, but he thought there ultimately would be only a few AI leaders with the capabilities, brand, and industry reputation of IBM Watson, and that each of those would work with a limited number of fintech partners.

Marstone’s launch with Pershing comes after the custody and clearing bank’s advisor unit announced three partnerships with other robo advice providers: Vanare, Invesco’s JemStep, and SigFig.

In a statement, Marstone CEO Margaret Hartigan said focusing on the institutional segment eliminates the need to reengineer a consumer site to make it enterprise worthy.

—by William Sprouse

William Sprouse, Financial Planning contributor, has written for Institutional Investor.


The information provided is for general information purposes only and is not intended to be legal, tax or investment advice. The information contained herein has been provided by sources other than Lord Abbett which are believed to be reliable; however Lord Abbett cannot guarantee the accuracy or completeness of this information.

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