For decades, science fiction has portrayed artificial intelligence as the life force of robots who want to destroy mankind. The reality is artificial intelligence is being used to build and plan for mankind’s future.

Legend Advisory Corp. Illustration Advertisement

Legend Advisory Corp., subsidiary of Waddell & Reed, has been using artificial intelligence to invest mutual funds into various assets. Legend has applied this practice when managing retirement plans, endowments, foundations, institutions and individual assets.

"We’re doing some phenomenal stuff," said Jim Leos, of the Legend Group and Legend’s regional vice president for Arizona. "We wanted to figure out what was the most proactive and scientific way to manage money that takes out the human emotions greed and fear. We’ve done that."

Investors, hardened as they may seem sometimes, and their clients are still subject to emotions that can sway investing decisions.

"When you’re dealing with the only nest egg a client has, it is extremely important to have a platform that is 100 percent scientific and unemotional," Leos said.

In early August, Leos met with the Arizona Board of Regents for the state’s three universities and was approved to allow the faculty to choose Legend to manage their retirement funds.

Terri Riffe, director of the University Teaching Center, had been trying to make this possible for some time.

"I had a strategic asset management plan with Legend separate from my optional retirement package from the university," Riffe said. "The Legend account consistently outperformed the university’s plan."

Riffe said the performance was because of Legend’s more aggressive approach to retirement funds than most.

"Given the fact that I am getting close to retirement age, I don’t want to go super conservative and have my money be eaten up by inflation," Riffe said. "I wanted to stay relatively aggressive but minimize risk."

According to Legend, in the last 10 years, this portfolio took on only 61 percent of the S&P500 market risk (a beta measurement of .61 relative to the S&P500).

"I am getting 7 to 8 percent more back per year than I was with my other account," Riffe said. "So getting great returns with less risk is the combination I was really looking for."

Riffe, financial educator and author of Money Matters: First Steps to Financial Freedom for College Students, also finds Legend helpful in her job.

"As a financial educator and author, I like to be on the cutting edge of helping educate people as to what is out there and available to them," she said.

Legend calls its artificial intelligence investor, AANN, Asset Allocation Neural Network, pronounced, "Ann."

AANN was designed by Shashi Mehrotra for Legend Advisors Corp. During the last 15 years they have fed thousands of pieces of information to AANN and she learned. She took the thousands of pieces and narrowed it down to 32 customized inputs, each of which is compressed from huge volumes of global financial data, in order to rank the relative strength of seven asset classes: large and small capitalization domestic stocks, investment grade and high-yield domestic debt, international debt and equity and cash.

"The data and reports are viewed daily," Leos said. "But once a month the advisory committee meets to ask AANN for an update on what she predicts four months out."

Any change greater than 5 percent is enough for the investors to do an asset shift. AANN’s forecasts during the last decade have proven to be 74 percent accurate. Leos said that number is higher now in recent years as she has learned more.

"Two years ago, AANN started favoring natural resources such as oil and gas, and look at what’s happened," Leos said. "In mid-June, she recommended downsizing on equities about 7 to 8 percent. It’s just a phenomenal platform."

While universities, hospitals and large companies utilize this service, Leos said it is available to the individual who comes into the office as well.

The Tucson Unified School district and Catholic Health Care West are currently utilizing Legend Advisory’s money management programs with a total of about $45 million in assets throughout the state.

"The next step is to make this artificial intelligence available to all universities and public employees in Arizona," Leos said.

The Legend Group, 665 N. Alvernon Way, is the broker arm of Legend Advisory Corp in Arizona.