Ramya Joseph's Pefin: Using AI to provide fiduciary financial advice to customers
Pefin is the co-founder of the eponymous company, touted as the world's first AI financial advisor, that is transforming the way financial advice is delivered
Ramya Joseph
Co-founder, Pefin Image: Alex Flynn/Bloomberg Via Getty Images
Ramya Joseph’s entry into the world of artificial intelligence (AI) came largely from a personal setback. Her father, who was due to retire in 2008, found himself out of work as the global recession wreaked havoc across the financial world. Joseph, who holds graduate degrees in computer science and financial engineering from Columbia University, stepped in to help her father, but soon realised the immense opportunity in financial planning, using AI.
Thus was born Pefin, touted as the world’s first AI financial advisor in 2011 in New York. The company claims to use AI to provide intelligent, fiduciary financial advice at a fraction of a cost of a traditional financial advisor. Pefin, using its neural network, tracks changes in a user’s spending patterns, account balance, markets and risk exposure and inflation and cost of living expenses to advice its clients.
Before she founded Pefin, Joseph had studied computer science at the University of Maryland, Baltimore County, prior to going on to work with IBM. After graduating from Columbia, Joseph worked with Morgan Stanley and Goldman Sachs as vice president before launching Pefin.
Since then, Joseph has also taken on the role of the head of project for the Bridge Project, a non-profit serving low-income mothers through guaranteed income programmes across the US. At Bridge, Joseph is responsible for creating a full technology platform for automation, fraud prevention and scale.
“Pefin was born out of a recognition that something had to change in the way financial advice was being delivered to people,” Joseph said in 2017.
The Pefin model claimed to have the capability to make 80-year financial projections and keep up with between 2 and 5 million data points per user. It is also capable of tracking changing rules to provide accurate and real-time advice. “Our platform uses proprietary AI technology to help make the most important financial decisions effortlessly and confidently,” Pefin says on its LinkedIn profile. “We provide personalised, actionable planning and investment strategies that automatically adapt and grow with you...”
While Pefin may be an early mover in the AI-based personal finance segment, increasingly, AI-based financial tools have gained ground in India and abroad. A World Economic Forum (WEF) survey finds that 41 percent of Gen-Z and millennials are comfortable letting AI manage their investments, compared to just 14 percent of boomers.
It has also helped that AI-powered financial tools have become more sophisticated, allowing young investors to skip human advisors in favour of algorithms. As per the Global Retail Investor Outlook 2024 by WEF, the trend is even stronger in emerging markets, where 48 percent of investors across all age groups are open to AI-driven investing.
“Given this shift, it is critical for leaders to reassess the retail investing landscape and ensure individual investors are equipped with the right financial education and investing tools that support their financial goals,” says Natalya Guseva, head of financial markets and resilience at WEF.