In a short period, this AI-powered financial advisor has amassed an impressive $20 billion in assets.

• PortfolioPilot, an AI-powered financial advisor, has rapidly amassed $20 billion in assets, hinting at the potential disruption that the technology could bring to the wealth management industry.
• Since its launch two years ago, Global Predictions' product has gained over 22,000 users, as stated by Alexander Harmsen, the founder of the company.
• This month, Morado Ventures and other investors provided $2 million in funding to the San Francisco-based startup for its growth, according to CNBC.

PortfolioPilot, an AI-powered financial advisor, has rapidly amassed $20 billion in assets, hinting at the potential disruption that the technology could bring to the wealth management industry.

Since its launch two years ago, Global Predictions' product has gained over 22,000 users, as stated by Alexander Harmsen, co-founder of the company.

This month, the San Francisco-based startup secured $2 million in funding from investors such as Morado Ventures and the NEA Angel Fund to support its growth, according to CNBC.

Generative AI has prompted wealth management firms to implement AI solutions that augment human financial advisors with meeting assistants and chatbots. However, the industry has long feared a future where human advisors are no longer necessary, and the possibility of this future seems closer with generative AI, which uses large language models to create human-sounding responses to questions.

Despite the emergence of robo-advisors like Betterment and Wealthfront, the advisor-led wealth management industry has expanded significantly over the past decade, with giants such as Morgan Stanley and others managing a combined total of $4.4 trillion in assets. In particular, at Morgan Stanley, advisors manage $4.4 trillion in assets, which is significantly more than the $1.2 trillion managed in its self-directed channel.

Harmsen, 32, who previously cofounded an autonomous drone software company called Iris Automation, stated that many providers, whether human or robo-advisor, often put clients into similar portfolios.

""Harmsen stated to CNBC that people are tired of generic portfolios and desire unique, personalized recommendations. Next-generation advice should be tailored to the individual and allow for control over involvement," said Harmsen."

AI-generated report cards

The startup integrates generative AI models from OpenAI, Anthropic, and Llama with machine learning algorithms and traditional finance models for over a dozen purposes, including portfolio forecasting and assessment, as stated by Harmsen.

Global Predictions evaluates portfolios based on three key factors: risk tolerance, risk-adjusted returns, and resilience against market downturns, according to him.

Users can receive a free report card-style grade of their portfolio by connecting their investment accounts or manually inputting their stakes into the service. For $29 per month, the "Gold" account offers personalized investment recommendations and an AI assistant.

Harmsen stated that we would provide you with highly specific financial advice and recommend specific actions, such as buying a particular stock or replacing a mutual fund with a more cost-effective option.

He suggested that the advice could range from simple suggestions to more complex ones, such as "You may be overexposed to fluctuating inflation rates, so you might want to consider diversifying your portfolio with commodities."

Harmsen stated that Global Predictions focuses on individuals with a net worth between $100,000 and $5 million, who are concerned about diversification and portfolio management.

The median PortfolioPilot user has a $450,000 net worth, he said.

While the startup currently provides customers with detailed portfolio tailoring instructions, a future version could allow the company to take custody of user funds, giving it more control over client money, Harmsen stated.

"We may see an increase in automation and deeper integrations in institutions over the next year or two, possibly leading to the development of a Gen 2 robo-advisor system that enables customers to custody their funds with us and have trades executed on their behalf."

'Massive shake up'

A few years ago, Harmsen developed the initial version of PortfolioPilot to manage his wealth following the sale of his first company.

After meeting over a dozen financial advisors, he became frustrated as they were "essentially salespeople promoting a standard approach," he stated.

Harmsen stated that the issue seemed genuine to him because the only viable solution he could find on the market was essentially becoming a day trader and managing his own portfolio.

He desired high-quality hedge fund tools and methods for assessing risk and implementing downside protection, as well as comprehensive portfolio management strategies for his various accounts and investments in crypto and real estate.

At the time he was starting a family and purchasing a home in San Francisco, he started coding a program to manage his investments.

Harmsen formed a team for Global Predictions with three ex-employees from Bridgewater Associates, the world's largest hedge fund.

In March, the Securities and Exchange Commission accused Global Predictions of making false claims on its website in 2023, stating that it was the "first regulated AI financial advisor." As a result, the company paid a $175,000 fine and changed its tagline.

Harmsen predicted that many providers will be left behind in the transition to fully automated advice, as today's dominant providers have been rushing to implement AI.

To generate advice automatically, you need to use AI and economic and portfolio management models, he stated.

"I believe that the traditional industry is facing a significant shift, as it is not incremental but rather a stark contrast," he stated. "I am uncertain about the future over the next decade, but I anticipate a significant upheaval for traditional human financial advisors."