Morningstar Introduces AI Adviser to Aid Evolving Investors

The CEO of investment and data firm Morningstar Inc., Kunal Kapoor, says that to meet investors’ needs, machines could help solve the problem of ever-expanding investment choices.

In a keynote address at Morningstar Investment Conference US on April 25, Kapoor said the firm is aiming to have its artificial intelligence chat program, Mo, respond within 10 seconds with an answer the user is likely to trust.

“We think humans and machines can work well together to help solve some of the problems of ever-expanding investment choices,” said Kapoor.

He also discussed the firm’s research on the evolving investor, detailed in its “Voice of The Investor” report.

“We wanted to get a sense of how investors’ behaviors and attitudes have changed, and we turn to investors themselves to do what we call the Voice of the Investor study,” Kapoor said. “We’ve polled more than 2,000 people across the United States to get a pulse on their moods and what they’re thinking about.”

Morningstar found that when working with an adviser, 38% of survey participants had a strong understanding of risk management, while only 21% of respondents who do not work with an adviser said the same.

“42% of investors in our study work with advisers, and 90% of those investors said that they find advisers to be extremely valuable, because advisers are personalizing the risk experience for them in a very tangible manner,” said Kapoor.

Participants said that, on average, advisers are not significantly more valuable than financial news or trading and investment platforms. However, investors who are “adviser-led” are less concerned about their investment decisions in several financial areas, as opposed to those who are “tech-led.”

The study suggested investors want reliable guidance from an adviser, Kapoor admitted: “Investors are telling us that they are just overwhelmed by data.”

Furthermore, according to Kapoor, investors are looking for advice on emerging asset classes. For example, cryptocurrency investors also want to find the best adviser to guide investment strategies, according to the study. Kapoor believes to meet the needs of the evolving investor, artificial intelligence is a potential solution.

“If we put AI as an industry, I believe it puts you as an adviser in a position to provide a much better investing experience and do that at scale,” said Kapoor. “So, let’s have some fun, and let me introduce you to Morningstar Mo.”

Mo, displayed on a vertical standing screen, was then wheeled onto the stage. The male-presenting AI wore a bright red sweater featuring the Morningstar logo.

“Our team has been having some fun loading up the open AI service with Morningstar signature research and data,” said Kapoor. “Then what we did is we hooked it up to a digital avatar from a company called Soul Machines in New Zealand, and then we added voice recognition. And, voila! Over the course of a weekend, Mo was born.”

Kapoor proceeded to ask Mo questions such as, “What makes a good financial adviser?” and “How does Morningstar rate the ARK Innovation ETF?”

Mo answered the questions, accompanied by various facial expressions and hand gestures.

There’s a lot going on for Mo to give you that answer,” said Kapoor. “First, voice is logged and converted to text. That text is then transmitted to an open AI model, which analyses more than 100,000 Morningstar data points to generate an answer. The text is then converted back to speech. That’s when Mo became animated and began to deliver that answer.”

With that, the AI era of investing advisement may have reached a new level, and Morningstar hopes it will only be a matter of time before ‘Mo’ is a household name.