Will JPMorgan’s AI Advisory Upend the Industry?

[This article is part of a new series from etf.com highlighting innovation in ETFs.]

Financial advisors are mixed as to whether or not JPMorgan Chase’s new artificial intelligence program, called IndexGPT, marks a transformation of the financial advisory industry, or simply heralds the arrival of a powerful new tool.  

JPMorgan’s recent filing of a trademark request for IndexGPT, designed to give customers financial advice, means it might be launched any day now, according to a trademark attorney.  

Financial advisors who spoke with etf.com shared mixed reactions to the JPMorgan program. It comes on the heels of the wildly popular AI-based chatbot ChatGPT, which is being used in the financial industry to pick stocks and design exchange-traded funds, among other things. New York-based JPMorgan manages $109.4 billion in 54 ETFs. 

ChatGPT’s big splash has forced the hand of many businesses to up their game and develop similar programs. Josh Gerben, founding partner of Washington, D.C. law firm Gerben Perrott, expects that more banks will develop programs similar to JPMorgan Chase’s. 

Upheaval Insulation

Financial advisors catering to high net worth clients are probably most insulated from any upheaval the product causes, Brandon Gibson, CFP, wealth manager of Gibson Wealth Management in Dallas, and a former employee of JPMorgan Chase, told etf.com in an email.  

“I don’t think they intend to eliminate financial advisors. Higher net worth investors will continue to expect top-tier professional advice from humans,” he said. “They’re looking for tools to handle the needs of smaller investors without having to devote more manpower to them.” 

Mark Wilson, CFP, president and founder of MILE Wealth Management in Irvine, California, said the bots are limited with respect to projecting clients’ future needs. 

“Banks can make a very good fact-based chatbot, but [with today's technologies] cannot make a satisfactory version of the projection-based bot,” he said in an email.  

Replicating the Human Touch?

He doubts whether a bot can answer questions about how much to contribute to a Roth IRA for 2023, for example, or help a client decide when to take Social Security benefits, or come up the best asset mix in a portfolio when the client is approaching retirement in three years.  

It’s the “human touch” that a bank chatbot can’t replicate, say most financial advisors who spoke with etf.com.  

“Customers' trust that is built through human relations and long-term communications may not be transferable to artificial intelligence,” Raymond Quisumbing, a registered financial planner based in Manila, Philippines, told etf.com in an email. “Banking is not just a transactional event; it’s also an emotional act of trust.”   

However, AI provides a bright spot for ETFs. According to a report from Bloomberg Intelligence, ETF funds associated with AI could see their assets grow to $35 billion, or threefold, by 2030, and their numbers nearly triple to 150 from 56 now. China may grab most of those funds thanks to its vigorous AI pursuit, even though it now has only three robotics-focused ETFs with about $67 million in assets. 

New York-based JPMorgan filed a request for a trademark for its IndexGPT on May 11 with the Patent and Trademark Office. The whole process will take about 18 months, said Gerben. JPMorgan Chase declined to comment. JPMorgan is able to launch IndexGPT while trademark approval is sought, Gerben said in a phone interview, as long as it proves to the patent office that it’s on the market and being used by clients.  

In the application, the bank wrote that the software will be “providing consumer product information for the purpose of selecting artificial intelligence (AI) hardware and software to meet the consumer's specifications; software as a service (SAAS) services featuring software for analyzing and selecting securities tailored to customer needs.”  

Follow Michelle Lodge on Twitter @lodgemich