Half of all financial advice to be led by artificial intelligence

Half of all financial advice to be led by artificial intelligence
Businessman touch automated data management system to create reports with KPIs and indicators connected to the database. Data analysis with intelligent AI robot technology in business analysis.

‘It is naive to think the human adviser will save the advice profession’

At least half of all advice will be led by artificial intelligence (AI) over the next few years, according to Finovation Consulting founding director Craig Barraclough.

Speaking at Multiply AI’s Best Practices for Gen AI in Financial Advice event yesterday (4 July), Barraclough said face to face advice will be a “shrinking portion” of the industry.

“Generative AI is going to empower the adviser,” he said. “As a society we are changing, and we are moving away from talking to humans.”

Barraclough also said he expects the industry to build trust in AI systems.

“If I can get the same advice from AI, then it becomes a question of value. We might be naive to think the human adviser will save the advice profession,” he said.

Despite the call to embrace the rapidly evolving technology, Barraclough said advisers should work on understanding the problems they need to solve and whether AI is the right tool for them, rather than implement AI with no future vision for it.

“Advisers have a lot of concern that they’re being left behind with technology but that’s just simply not the case,” he said. “There is a lot of confusion about what AI can do for businesses, and what it is. You need to understand your future vision for your firm and find the right tool for that, whether AI is the right tool for your business remains to be seen.”

Multiply AI co-founder and chief technology officer Mike Curtis said if it is one thing that AI will take away from advisers, it is administration work.

“Advice automation won’t take away advisers’ time with clients,” he said. “It will just take away administration work. Advisers should be open to new technologies.”

He added: “There’s a sense that people who work in this industry for a long time get comfortable with their systems, but some advisers who have been working for a long time in the industry are up for trying new things. Advisers should go and have a play on ChatGPT. Being up for experimenting will teach them so much more.”

Meanwhile, PwC director Jessica Lewis said that although she believes AI is growing rapidly within the advice industry, it does not present a risk to human advisers being replaced.

“We need to remember the reasons why people go to an adviser in the first place,” she said. “Reassurance is a massive factor. We are in an information age. People do not just want retirement decisions, but they also want life support. Is there a risk to human advisers being replaced? I don’t think so because that reassurance comes from someone you trust – a human.”

Lewis further stated that AI presents an opportunity in maximising the time spent with clients to give them reassurance.

She also said AI is a “huge enabler” of good consumer outcomes and can help advisers maintain compliance with the Consumer Duty regulation.

Another advantage to the technology, according to Lewis, is that whether a firm is large or small, technology can be a way to reduce costs, especially as the adviser market is growing annually at 1%.

“Everyone is looking at how to scale advice to meet an unmet need in the market, the costs need to come down and realistically, technology is the way to do that,” she said. “The cost of technology is coming down tremendously which is exciting. This is something the whole industry needs to grapple with. There is a huge opportunity for smaller firms to be agile and move quickly. The industry has a massive opportunity to go for an affluent and growing segment.”

Source: Professional Advisor