Rich advisors say AI is not a game-changer in attracting new clients

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide for the high-net-worth investor and consumer. subscription To receive future issues, directly to your inbox.

Market data companies are touting artificial intelligence as the key to locating ultra-high-net-worth clients. But leaders at elite advisory firms told Inside Wealth they’re not sold.

To begin with, while AI products can expose the data and contact information of high-net-worth individuals, this is only half the battle.

“When we’re looking for clients with more than $100 million, I have a hard time believing they’ll get a cold email and say, ‘Oh yeah, that’s my balance sheet,’” said Matthew Fleisig, CEO and co-founder of Pathstone, a registered investor advisory with $182 billion in client assets.

Instead, he said, referrals come when the company operates on a more personal level, such as when Bathstone once secured a private jet in less than an hour for a client who needed to move from New Orleans to Albany, N.Y., before his mother died.

“These types of things are how we can grow our business,” he said. “We create moments that matter.”

AI in customer prospecting has not been the game-changer that startups claim, Fleisig said.

“These databases have been around forever, and now people have added an AI overlay to be able to mine the database,” he said. “Most of the time, very similar strategies are to aggregate data sources that are public or that you can pay for, and try to feed you lists of people. At this point, we can do that ourselves.”

A growth executive at a cutting-edge national RIA told Inside Wealth that he has conducted at least 20 demos of AI client prospecting tools in the past six months, and he said most of them are built on large, widely available language models like Claude and GPT.

“You put a coat of paint on one of the big five LLM firms and sell on the fact that ‘our information is better,’” said the executive, who requested anonymity to talk about client acquisition strategies. “Do I pay them $100,000 or do I talk to my IT team and figure out a way to do it for cents on the dollar?”

There is little competitive advantage to using non-exclusive data, said Andrew Douglas, head of growth at AlTi Tiedemann Global. When an independent wealth management firm used to make phone calls to clients from this type of database, the client usually already had an advisor or had been contacted by dozens of other firms already, he said.

Over the past five years, customer referrals and personal networks have accounted for 40% and 30%, respectively, of AlTi’s organic growth, he said. Another 30% comes from connecting with experts such as estate lawyers and accountants who are likely to work with clients going through a liquidity event, such as inheriting a fortune or selling a business.

“Most people come out and say, ‘Our minimum is $25 million, so anyone with $25 million in liquid assets is a great client.’” “We don’t think that’s an ultimately successful strategy,” said Douglas, speaking from the Heckerling Estate Planning Conference in Orlando, Fla. “We think that really being seen in the market as a subject matter expert, and consistently showing up in places like Heckerling and where the professional community is there and the ability to provide value, is the most effective way to grow a business.”

Word of mouth referrals are not inherently scalable and can be slow. A sales cycle with a high-net-worth client can take 12 months, if not longer, Douglas said.

However, he said HNWI-focused consultancies like AlTi Global look for quality, not quantity. The company’s annual goal for organic growth is 25 to 30 new clients in the U.S., which could add about $1.5 billion to $2 billion in new assets.

Eden Ovadia, CEO of AI lead-prospecting startup Finny, said she’s used to facing skepticism. Ovadia, who co-founded Finny in late 2023, said she views AI mining as a complement to traditional communication rather than a replacement.

One common way premium advisors use Finny is to promote exclusive events to the right audience, she said. For example, an advisor who wants to invite potential clients to a booth at a Miami Heat game could use Finny to identify people who work in real estate and are interested in the team. Ovadia also said Vinnie could be used to identify clients who might need advice after a life shift, such as finding people who recently purchased a property worth at least $5 million near Jackson Hole, Wyoming.

“There’s definitely a little bit of cynicism that we have to get over when we talk to high-net-worth companies, and they say, ‘No, we don’t do AI. We want everything to feel really personal, really white-glove,'” she said. “I couldn’t agree with you more. The idea here is that we can actually show you more data about your customers or potential customers than you even know.”

Finny can also be used to monitor existing clients and watch for signs they might be unhappy, such as searching for investment advice online, Ovadia said.

Fleisig said he’s most excited about customers finding Pathstone through AI platforms like Gemini and ChatGPT. In the past two weeks, Bathstone has received five inbound inquiries from customers worth at least $100 million from AI search engines, he said.

Douglas said that although artificial intelligence has not changed the way AlTi Global finds new business, he is keeping an open mind.

“If someone has a better mousetrap, we’re certainly excited about what the market will look like and what it will achieve,” he said.