If an investor sets some sort of financial goal as one of their New Year’s resolutions and heads into 2022, there’s a good chance they’ll only be a few weeks away from realizing they’ve missed the mark.
But that realization won’t stop them from doing their best Philadelphia Phillies impression and saying “maybe next year.” Most investors do that without the guidance of a financial advisor.
A new year-end survey From Magnify, Tiffin search-powered marketplace for investments, 58% of Americans are either not on track or don’t know if they are on track to meet their financial goals by 2022. John Clough, Magnify’s General Manager for Consumer BusinessThe same survey found that 72% of respondents plan to return to the ring and invest in the next year.
While Clough said that number is encouraging, a majority (36%) of the 1,000 respondents polled in mid-October said they planned to invest on their own. Another 32% said they would work with a financial advisor, and 4% said they would turn to a robo-advisor.
The remaining 28% do not intend to invest.
Aware of the high failure rate and desire to go it alone, Klaff said Tiffin and Magnifice want to leverage AI to fill the gaps. The organization has just started Magnify personal, a tool that gives investors access to an AI-powered investing assistant that provides insights, portfolio analysis, guidance and long-term planning. Subscribers can ask their assistant, “How can I invest in current market conditions?” or “Which sectors performed best this month?” Or “Compare Apple, Amazon, Tesla, Netflix” and get the data and guidance you need right away.
Clough said the survey found that the main reasons people don’t invest are lack of knowledge/confidence (47%) or lack of understanding of where to start (27%).
“Knowing that more than half of Americans lack confidence in their long-term financial outlook, now is the time to start thinking about your roadmap to investing,” said Clough. “Magnify not only gives people access to invest independently, but also gives them the knowledge to make informed and confident decisions that empower them to become more empowered investors.
Financial planning Clough was caught up earlier this month to discuss the current enthusiasm for automation in wealth management and how the real power of artificial intelligence is human intent.
This interview has been lightly edited for length and clarity.
Financial Planning: What is Magnify Personal about and what problem is it trying to solve for advisors and investors?
John Clough: TIFIN Wealthtech is right on the heels of the work it was already doing… providing AI insights about consumers to financial advisors and asset managers to help inform product development. Last year, we launched Magnifi with our search bar and it got an amazing buzz. It was actually a very useful tool. The reason is that people were curious. Mostly how much DIY investors can withdraw from this. How much will it help them develop their portfolios? How can this help direct them down the street to funds that will help support their portfolio? But we quickly realized that people don’t have much intention. They’re sitting there in front of that search bar and they’re like, “What do I do now?” I hear all these things in the news, but I don’t develop my portfolio. So really, ultimately, the problem that we’re solving is one that financial advisors – at the high end of the market – are solving, and robo-advisors at the lower end of the market are solving, which is to help clients feel confident about investing their money for long-term impact and long-term financial goals.
When we built the tools, the problem statement was really, how do we help these customers build their own portfolios and protect their own interests, their own risk tolerance, their own life goals? What will empower them to make their own choices?. The problem we see is that data and intelligence haven’t been pushed to the very top of the market, and haven’t really been democratized for DIY investors in an objective way. Or at the lower end of the market, it’s completely unclear. You set your risk tolerance. You set a general framework for when to retire. Then it is a “one-to-many” device. Basically you are a collective, and you don’t really make choices about how to influence your personal interests. Now, how do you do that? This is where the AI magic comes in. AI ultimately processes thousands of data inputs. In nanoseconds, it makes sense of that data and makes a recommendation on how to proceed. It does so in two different ways. First, try to understand what your purpose is. What are you trying to gain from the act of investing in the market?
FP: To pause there, why is intent so important when talking about AI? How is a DIY investor better than getting in there and playing the market?
JK: You know, it’s generally against our morals. What we’re really trying to do with Magnify — really (Tiffin founder) Dr. What Vinay Nair is talking to the public – We have to get out of this gambling mentality. We are not setting Americans up for future success and what is happening in the market is absolutely toxic. When you start blindly following, and it doesn’t map to some sort of logical historical data, macroeconomic impact, or any stimulus happening today, you’re really just trying to make a quick buck. It is not an investment. Go out and get FanDuel. There is nothing wrong with that. But it is different. That is the purpose. That is the gamification of securities. We are not into it. We believe that a large portion of the population is currently underserved. Many of them are actually women with a lot of money. Everyone (investors) sees that there is a lot of fear in the market. You’ve got dismissals in the meta. You’re doing all this on Twitter. They’re like, ‘OK, I know, I want to invest, but right now I’m too nervous to lose my money’. Even what we’ve seen in our surveys … 30% of our customers are actually afraid of losing money. Because they lack historical perspective.
FP: There are many new AI and machine learning solutions available now. It’s hard to separate those who do it well and those who don’t. Magnificent was Recently honored for getting it right. What makes your product different?
JK: I think this is a testament to our tech and product engineering teams. Honestly, that’s really their secret sauce. In my view, there is a lot of fly-by-night in this industry. The reason we decided to retain the moniker “Magnify by Tiffin” at the brand level is because Tiffin has done it right on the enterprise side for many years. They also built credibility. Our investors are … JP Morgan. Broadridge, Franklin Templeton and Morningstar are all strategic partners or investors who use our services and see the value of artificial intelligence supporting their advisory business and their asset management business. So the credibility, honestly, is there. This is why we believe its retail focus will be successful: We know we have been able to help investors through our financial advisory services. So the next thing to do is turn that magnifying lens, if you will, and put a highlight on retail consumer needs.
Another reason is the principles we believe in. We talked about the ethics of what we do, and that’s what everyone is talking about now. We’re not the only ones talking about now being a great time to start investing in a down market. You have some great opportunities right now. However, what is missing here is that consumers are smarter than they were 10 years ago. They understand more, how does it work? How does this benefit me? When you look at our technology, if you think about it, I couldn’t make the statement that Magnify Personal is like Alexa invested 10 years ago, because people are like, what is Alexa? So the idea here is that AI is pervasive, but pointed at the right thing.
What happens if you have people like Elon Musk talking about AI or training AI to do unethical things, this will create a lot of negativity around AI. I think Magnifi will really benefit because we have a vision, we have a mission to help simplify investing for DIY investors, and we have a mission to help them with their long-term goals. If you have that mission and filter everything around a mission to do your customer good, it ensures that the AI you’re creating doesn’t turn off and start generating noise or bad behavior. If you train AI to do the right thing, it will produce positive results for customers. Frankly, that’s the kind of business I want to be in. That’s what brought me here from working at Facebook and Meta and before that at PayPal and Google. I believe in the mission of what we are trying to solve.
FP: In your opinion, what is next for AI in wealth management? Are you excited about the possibilities?
JK: One of the things I’m most excited about is that I think the sky’s the limit. I think when you start looking at it as being able to point our tool at all of your portfolios … being able to absorb that information and having a richer understanding of who you are, I think that’s where it goes. Give us plenty of opportunity. I’m also very excited about where we’re going next with retirement planning and optimizing your portfolio. Today we have the ability to provide 24/7 guidance on your portfolio. Soon we can knock on your door and say, hey, Justin, some of the equities or securities in your portfolio are down or up. Want to help you figure out how to optimize or maximize your results? Now, I think most DIY investors are used to robo-advising and it’s a set-it-and-forget-it scenario. So, I’m really looking forward to the change in behavior that I want to be on this app, I want to learn, I want to be active where I go.
And its final point. I’m excited, and the beauty of AI is that the more people interact with it, the better we can get. We’re a young company, and I’m looking forward to seeing how people use it. I think there’s a use case we haven’t even thought of yet. That’s the beauty of it. Once people start using it, instead of asking us questions, we can say, wow, that’s a last resort. We can fix it and help the millions of people who take that journey.