A wide range of apps is already being used in day-to-day life. Institutional trading platforms, direct access brokers, and HFT-investment tools expand their capabilities via API connections from AI backend systems. Companies with a significant footprint in the artificial intelligence sector have shown remarkable evolution and strength in the financial markets. Investors who have chosen the right stocks in the early stages of AI made meaningful profits partaking in their growth.
AI Revolutionises The Economy
Whether in the investment or energy sector, legal advice, retail or elder care, the areas in which artificial intelligence systems can be used are numerous and broad. Consequently, companies and analysts assume that artificial intelligence will revolutionise the economy of the 21st century.
AI has become a fundamental everyday companion for many people. For example, many use it to access buildings and data centres or digital facial recognition on their newest smartphones. Internet search results are getting better and better by picking the best results for a relevant query out of multi-millions of potential websites. In addition, voice assistance and translators become faster, and spell checkers in e-mails are more accurate than ever before.
The chances are that millions of people will be transported by autonomous driving cars soon. For their use, test automobiles are in operation worldwide. They collect "driving experience" over millions of miles and collect the essential data for self-learning algorithms.
Investors In AI-Focused Companies
Companies with a substantial focus on artificial intelligence see rapid gains on stock markets like the New York Stock Exchange or Nasdaq. Tech giants such as Microsoft Corporation, Nvidia Corporation, Alphabet Inc., and Apple Inc. have seen significant gains between March 2020 and December 2021. They all have in common that their services are used with existing products without selling something new to a customer.
Microsoft Windows is still by far the leading operating system on P.C. Alphabet's Google search is implemented on billions of devices and used by billions of users around the world every day. Nvidia's graphic cards are part of most gaming computers, and Google's Android-based devices dominate the smartphone market along with Apple's iOS systems. Those technologies play a crucial role in advancing artificial intelligence, whether Alexa, Cortana or Siri.
Nevertheless, caution is required, like with any investment. Being an industry leader in a growing market does not automatically ensure unlimited success without risk.
Companies can fail despite good ideas. Facebook, for example, changed its company philosophy in late 2021 by re-branding the company name from Facebook to Meta Platforms. with the focus on the growing Metaverse. This new company strategy is not a guarantee of success, and first growth projections confirm that the future growth is expensive while the user base is shrinking for the first time. Facebook goes with the Metaverse trend, and people tend to confirm that this is a real trend, but it might take decades before actual results become visible in balance sheets.
Therefore, buying individual shares of companies focusing on AI can lead to meaningful profits and extensive losses. Regardless of the prevalent company strategy, current market stake and future expansion of the digital transformation.
In general, investments need explicit expertise to determine the best possible companies worth an investment. The risk of investing in specific assets is significantly higher than for mutual funds that invest broadly and are actively managed by investment professionals.
AI Company Investments
Investing in specific shares of a company requires insights into the most key company fundamentals and ample knowledge about the stock market in general. Many free stock trading platforms provide free information about company metrics like:
- Market Cap
- Profit Earnings Ratio
- PEG Ratio
- Dividends
- Earnings Per Share
In addition, numerous websites also supply users with stock charts, technical analysis features and portfolio tracking functionalities. But, in the beginning, investors have to learn how to interpret those company fundamentals correctly. Comparisons relative to other companies in peer groups and other sectors are also meaningful.
A small fraction of investors prefer day trading volatile growth stock with big stakes in AI technologies. They utilise tools to profit from minimal stock market movements. Such tools often focus on high-speed trade execution, extensive charting capacities and excellent customer support. Some of those platforms also use AI to find the best tradable stocks.
Day traders often trade 1,000 shares or more at once to achieve a high cumulative profit. Interestingly, a day trader holds 100% cash overnight without investment exposure. Therefore day trading is entirely independent of the company's future potential and business success.
Day trading is one of the most speculative investment strategies and demands a massive time responsibility. That's why most investors choose long-term investments by using instruments like ETFs.
Diversified Portfolios
Investing in artificial intelligence-focused mutual funds or exchange-traded funds is often considered a much safer alternative to day trading. With an accelerating digitisation trend, some investment funds focus entirely on artificial intelligence to benefit from the value driven by this technology. Their broadly diversified portfolios help investors partake in the evolution of AI companies worldwide.
Diversification of investments by investing in ETFs is a great alternative to day trading AI stocks. The key benefits are:
- Investing in ETFs requires a small time commitment
- Most stock brokerages in the US allow clients to buy and sell exchange-traded funds without the need to pay commissions
- The issuer of the ETF manages it and takes care of rebalancing activities.
Conclusion
The artificial intelligence business has immense potential, and it will be one of the pivotal disrupting industries in the 21st century. As a result, investors can now participate in the future growth of AI in numerous ways. Retail brokers and more specialised HFT brokers continuously expand their capabilities and enable investors to connect AI systems to their order routing systems. Algorithms take care of the order routing and trade execution process.
Long-term investing via AI-focused exchange-traded funds has some limitations in controlling the company diversification within the ETF but requires only a little time commitment from the investor. In contrast, investing in stocks is an excellent way to diversify a portfolio directly. Still, it requires comprehensive knowledge of financial market behaviour and insights into key company financials. Yet, day trading volatile stocks allows to stay on cash overnight, but it is only an option for professionals and demands the highest time commitment.
In what is set to be one of Wall Street’s biggest deals since the crash over a decade ago, Morgan Stanley is intent on buying E-trade in a $13 billion all-stock transaction. The deal will continue Morgan Stanley’s ongoing transformation into a more reliable financial firm that relies more on assets and wealth management.
The purchase of E-trade will carry across 5.2 million client accounts, $360 billion in retail clients’ assets and further customers that may now make use of Morgan Stanley’s vast expertise. Current rivals Charles Schwab and TD Ameritrade are currently mid-merger, so this consolidates Morgan Stanley and E-Trade position in the investment brokerage markets.
Forrester’s senior analyst, Vijay Raghavan told Finance Monthly: “In the wake of the price war that first started when Schwab got rid of stock trading commissions, E-trade was weakened because of its reliance on commissions - just like TD Ameritrade (before it was acquired by Charles Schwab).
“Nearly half of E-trade’s customer base (48%) is comprised of self-directed investors. Self-directed investors prefer robust trading tools, real-time market commentary, and charting tools, to name a few.
“Morgan Stanley’s wealth management business serves an affluent investor base who comprise the delegator segment, relying on financial advisors to make investment decisions for them.
“This acquisition complements Morgan Stanley’s existing affluent customer base, providing them with a wider array of customers with different levels of investable assets. It also gives them a direct-to-consumer brokerage business, and $56 billion in deposits which will help cut down on risk during an economic downturn.”
As part of this month’s Professional Excellence feature, Finance Monthly speaks with Michael Kasula - the owner and Founder of Brokerage Agency Producer Resources. Based in the Chicagoland area, the company is a tightknit community that aims to find like-minded partners, grow businesses, and build lasting relationships. Producer Resources’ mission is to become a valuable partner for the advisers they serve, saving them time and money with the design and implementation of life insurance planning. Here Michael tells us about setting up Producer Resources, their identity and mission and his new company Clarus Hall.
How did you decide to start your own company?
Very early on in my career, I knew I wanted to start my own organisation and be a trusted resource for agents in the life insurance space. In 2013, I was already having success being that resource, but I was working for someone else. That company was going through an acquisition and I knew that changes were coming. That same year, I had a client meeting at a coffee shop in the north suburbs of Chicago. During my presentation to him, he interrupted me and asked, “Why don’t you start your own company?” I had already been forming Producer Resources in my head, but a question like that - from one of my best clients - got me even more excited. I knew there was never going to be a better time, so this is how I decided to found Producer Resources in 2013.
What was the process of setting up Producer Resources like? How did you attract your first customers?
When I was first looking at who I wanted to attract and retain with Producer Resources, it was pretty simple - life insurance advisers who wanted to grow their business without having to grow their overhead. We are an extension of an adviser’s business - that is the message I started with and a big reason why Producer Resources has been so successful. Whether you need case design, advanced sales, or underwriting assistance, we are an experienced and professional team aiming to help our partner firms. I am a value person and I look for opportunities everywhere. If someone has an idea or a referral, I look at how I can use that for the benefit of my clients and my business. That’s what Producer Resources is all about.
In what ways have the company’s services evolved over time?
Producer Resources is a full-service extension of an adviser. From case design to policy issue, we have what an independent life insurance adviser is looking for. This couldn’t happen without our amazing and passionate team. Through a few changes on the sales side of the company, I think we have found our identity - an elite unit working together rather than independently as satellites. This has kept everyone invested in and accountable for the same goals and allows me to manage our company’s growth and be tactical about it.
Equally important, in an industry plagued by a lack of technology, we’re constantly giving our advisers the most up-to-date software out there. We’ve added different tools to help an adviser be their best with their clients: in-force policy management tools, interactive product presentations, co-branded marketing material and presentations, etc.
What are the challenges that US insurance companies have been facing over the past year?
I’m not an actuary, but knowing the way they invest their large general accounts, I would have to say interest rates have been the most challenging hurdle insurance companies have faced in recent years. When they receive premium payments, these monies are locked up for long durations. With interest rates this low, it is difficult to keep pricing competitive. Some companies have put premium or death benefit restrictions on products and some have just stopped sales of certain products altogether.
In the political arena, we’re seeing hotly debated regulations from the Department of Labour. Insurance companies have a lot of housekeeping to do to make sure they are compliant with any guidelines that have or will be enacted. There is also that grey area of fixed annuities and life insurance and what will and won’t be part of the eventual DOL decision. As far as public perception, some carriers have faced increased scrutiny in the last year due to increased COIs, reduced dividend/crediting rates, or just a general lack of customer service. In a constantly evolving market, I think carriers need to learn how to streamline their process; from application submission to ordering there in force illustrations, things need to be made more efficiently. In some ways, insurance companies need to get with the times and I think the DOL is attempting to address that, at least on the transparency side, with regulations. We’ll see how that goes. Regardless of that, improving transparency and technology for the benefit of their customers will serve the industry well, and their customers will be better because of it.
What differentiates Producer Resources from its competitors in Illinois?
I think the biggest differentiator is that Producer Resources is in high-growth mode, and we are passionate about what we do. We have a young and motivated team, with a mission to change the industry. I realise that can sound a bit presumptuous, but we have a vision, we work hard, and we’re getting closer to our goal every day. I want advisers to know that when they partner with us, their life insurance business gets done as efficiently and successfully as possible.
At our core, we are a team of highly skilled life insurance professionals that offer expertise in sales, advanced design, case management, and underwriting. We also have several strategic partnerships in the life insurance industry and closely related industries that we frequently use for the benefit of our advisers. To give you an idea of our capabilities—one of our best producing advisers runs his company as the only member, keeping his overhead low and focusing on networking and building his client base. He utilizes us for everything else. Together, we recently put in force a large estate planning case that we’ve been working on for the better part of a year. He told us that partnering with us was the best decision he’s made in his entire career.
What does 2018 hold for you and your company?
One of the key exciting things happening to us is the new company we are rolling out - Clarus Hall. “Clarus” is Latin for clear, bright, and shining. We combined the word with “Hall” because we want our members to think of our group not as a static place, but somewhere they can move forward with bright, like-minded people. With Clarus Hall, we are creating an organisation where life insurance professionals can get the support, comradery and growth opportunity they are looking for in a long-term partner. This group is going to eventually consist of 100-150 life insurance advisers that want to be part of something that allows them to grow while maintaining their independence. They will have additional resources with our firm and will have bonus and profit sharing opportunities to make their compensation very competitive and allow them to grow with our group.
What more can you tell us about Clarus Hall? What are your goals with this organisation?
We want to create a place for the advanced life insurance adviser to partner with a firm of significance to give them the support they need to grow their business. When we attract enough life insurance professionals to partner with Clarus Hall, we can create something much larger than any of these firms can do by themselves. Giving us depth, we will be heard by others. I want to make this firm’s initiative also marketing to the public on the importance of life insurance, attracting key advisers such as CPAs, attorneys, investment managers, property and casualty agents - anyone in the business that is looking for a group of vetted life insurance professionals to help their client with any type of estate or business planning need.
Michael Bender has worked in the insurance broking industry for over 30 years, specialising in the placement of International Binding Authority contracts for Coverholders in Liability and Property classes. As a Managing Director, he is responsible for the day-to-day running of B&W Brokers. Here he speaks to Finance Monthly about the company’s beginnings, his involvement in it, and the advantages and challenges of his role.
You helped set up B&W Brokers in 2015 – what was the process like? What were some of the challenges that you were faced with?
B&W Brokers was set up in 2015 by my business partner Neil Walton. I was sitting at home on gardening leave adhering to my restrictive covenants imposed by my previous employer whilst Neil forged ahead with our plan to set up a Lloyd’s Broker. The toughest part for me personally was that I was unable to meaningfully assist Neil until after 18 months from when I gave my leaving notice in.
The FCA Approval Application process was very time consuming and arduous and the information required was endless, but with the assistance of an outside third party was completed and agreed within 10 months. Once FCA Approval was granted, we sought Lloyd’s of London Broker Status Approval and this was completed and agreed within a further 4 months.
Shortly after B&W’s Lloyd’s Approval was confirmed, I managed to negotiate an agreeable arrangement with my previous employer which enabled me to start working at B&W and also allowed some of the colleagues who had previously worked with me to join us at B&W.
In real terms, in January 2016 B&W was finally up and running and the clients we had been previously dealing with, for the most part, decided to move to us.
What were the company’s priorities towards its clients from the very beginning? Have these changed, 2 years later?
Our priority was to make the change of broker process as easy as possible for those clients that chose to join us and to continue to be a professional, independent, honest and loyal broker to them.
The first priority I believe was achieved and the second part to this day remains the same to our existing clients and to any clients that may join us in the future.
What would you say are the benefits of being a specialist boutique broker?
The benefit of being a boutique broker is that we can provide clients with a personal service. We do not overstretch ourselves by trying to handle business we have no knowledge of. We avoid clashes of interest between our clients and this has resulted in us maintaining loyalty from our clients. Over 50% of our clients have been with us, as individuals, for over 20 years.
As with any new business, cash flow is a major consideration and with the help of Neil Walton’s other company Centor Insurance & Risk Management, which assisted us with some funding, after a relatively short period, we have managed to stand on our own two feet. The fact that the company has no debt and even managed to pay its shareholders a dividend in its first full year, is a testament to how well the business of the company has bedded in.
As a Managing Director, what are the main day-to-day challenges that you face?
The main challenge, apart from compliance, for me is to keep the clients happy. In an ever-changing market, where IT & Data capture is becoming increasingly more important, we need to keep up with our competitors or even move ahead if possible.
What is the most rewarding aspect of your role?
Being able for the most part to be in control of my own destiny for the first time in my career.
Also, it is rewarding to be able to make decisions with my senior colleagues that will determine how B&W Brokers will hopefully grow and evolve.
What is your overall mission for the company? How do you ensure this mission is upheld?
Our mission is to stick by our principles and encourage other like-minded individuals to join us to help grow the company. In a society that has increasing pressure to succeed we do not want to be sitting on our hands, but we do not want to grow by changing our ethos either.
What do you anticipate for the future of B&W Brokers?
I would anticipate that we have steady growth for 2017 in the main current territories that we trade in, namely Canada and Australia and then look to broaden our appetite for business in other classes of business and territories in 2018 onwards.
For our size, we are a profitable company and this will always be a focus of ours no matter what potential growth is achieved.
One of our strengths is that we have a “Hard Core” of Lloyd’s Underwriters who have supported us over the years and have remained with us through thick and thin. We want to continue this approach by achieving the same in other classes of business.
Our aim is always to see Underwriters and our Coverholders make a profit on the business they write. This has not always been easy when contracts become large in volume and underwriting focus is sometimes lost but we endeavour to give a balance of business to our markets so this may be achieved.
If you would like to find out more about B&W Brokers Limited please email info@bandw.london or visit www.BandW.London.
“In an industry that provides a product that a client is forced to buy for one reason or another we aim to make the process of buying insurance less painful for our insureds.”
FirstPort Insurance Services is a respected and trusted insurance broker working in a niche market that specialises in insurance for blocks of apartments. It prides itself on its ethical ways of working and customer-centred ethos. Managing Director, Judi Runciman talks about her approach and that of her team, which ensures that the business stands out from the crowd.
I began my career in insurance 45 years ago as an underwriter and moved to broking when I was given the opportunity to run a small brokerage office. I have never looked back. Since then I have worked both at a local and national level and have seen a great deal that has inspired me for my leadership of FirstPort Insurance Services.
FirstPort as a business has a strapline ‘More Than Just Bricks and Mortar’, in our business this has never been more relevant.
We deal directly with Resident Management and Right to Manage Company Directors who are entering into contracts with us to arrange their buildings insurance. Some of these clients have taken on these roles without prior property management or insurance knowledge and we take the time to go the extra mile so that they fully understand what service we provide and the benefits – it’s about making their life easier. With block insurance, not only is it important that we get the right price, but also the right cover as not all products on the market are comparable.
As a contents insurance broker, with over 12,000 contents insurance customers, we are often dealing with vulnerable people when it comes to our retirement property customers who require a service that offers reassurance and confidence in our ability. Each customer has a named contact within our team so they can speak to the same person for all their dealings with us and can form a relationship with them. Customer feedback on our unique approach is very complimentary - we have many long term customers coming back to us year on year because they trust and value our service.
The environment we deal in can be extremely complex. For buildings insurance, we are often dealing with multi-block sites that require a tailored approach. We deal with crisis situations, such as large-scale water damage that can affect 100s of apartments and communal facilities. In these situations, we need to be on hand to provide not only a rapid response, but one that meets the needs of all customers concerned.
My team are wonderfully supportive and we are all on the same wave-length as I only employ people that can showcase they have strong ethics and morals. I know we will always put the customer at the heart of what we do, not only because that is what is expected of us by our regulators*, but also because everyone deserves to be dealt with in a respectful manner and given the best advice and service. We work very hard to be fair and transparent to our clients and to treat them with the respect we would wish to receive ourselves.
We operate in line with our own Code of Ethics that I have developed with my team. It sets out the standards we want to work to. For us, it’s about being accurate and straightforward with customers and ensuring advice is tailored and suitable for their individual needs. It’s also about remembering everyone is an individual and about putting ourselves in someone else’s shoes and seeing it from their perspective so the service truly reflects their situation and requirements. We know we don’t always get it right but we always learn from our experiences and have a will to continually improve.
It’s very exciting times for FirstPort Insurance Services. We are growing, with plenty of new business on the horizon. FirstPort recently announced a major acquisition of Pentland Estate Management. I am confident that this will give us an opportunity to WOW a whole new customer base, and I am confident our customer–centric approach will serve us well and see us taking our business forward in a way that I am extremely proud of.
*FirstPort Insurance Services is authorised and regulated by the Financial Conduct Authority.
Website: https://www.firstport.co.uk/
