In the second of our series on artificial intelligence, a range of advice professionals share how AI is being approached in their firm. Here’s what they said.
It seems no profession can escape discussion about the implications of artificial intelligence (AI) for their sector, including financial advisers. The ability of ‘generative’ AI to trawl vast amounts of data to produce high-quality, in-depth content with a human voice in seconds would seem to have extensive applications for the industry.
The FCA acknowledges that the use of data and tech continues to transform financial services. [1] So how are UK advisers approaching this new tech? To find out, the research team at M&G Wealth gathered opinions from 20 advisers, paraplanners and business owners/directors across the UK, with assets under advice from under £20 million to over £1 billion.
Early days for AI
M&G Wealth’s research shows it’s early days for adoption of AI among UK adviser firms, but interest is clearly there. Eight firms out of the 20 surveyed have already experimented with AI tools like ChatGPT.
Twelve indicated that there was no AI integration within their professional environments or in a personal capacity; only one firm dismissed the technology as completely irrelevant to their business.
Time efficiencies
Several advisers in the research are optimistic about AI’s content-generation abilities to support tasks such as report writing, letter drafting and general data retrieval for reports.
“We have used ChatGPT to get a feel for its capabilities and how it could shorten the time we spend on certain client-facing reports,” says the principal at a one-adviser firm. “The manner in which it will aid our business and increase efficiency is many months away, but we will embrace anything that makes us more profitable and efficient.”
Another firm which specialises in retirement says it has experimented with ChatGPT and Bard to help design templates within the business. “When we began to review our processes and communications to prepare for Consumer Duty we would put broad questions into these apps and review their responses. We feel it is important to embrace its use because AI exists now whether we like it or not.”
One paraplanner at a mid-sized firm is the most advanced user and is using ChatGPT to help with coding in Python Power Automate, which in turn is being used to automate a number of processes around investment data-gathering and analysis. They say ChatGPT is delivering quicker and clearer results than other data-searching tools.
Opening up advice
Because it can cut the cost and time of many admin tasks and general processes, there is quite a lot of interest in AI’s potential to open up advice to a greater audience, enabling simplified advice or even by improving robo-advice offerings.
“[That could include] administrative tasks and report writing to improve customer experience and speed up the advice process,” suggests a corporate financial adviser from a large firm. “In turn, it may be useful for consumers who are price-sensitive and to replace advice where decision trees are being used.”
A paraplanner in a small firm believes AI could be the key to providing a baseline level of advice: “Hopefully, AI could take up some of the slack for those that currently can't afford advice and are excluded from the market.”
Keeping the personal touch
Every professional surveyed sees AI as a complement to not a replacement for human advice.
“Robo advice hasn’t been overly successful so that would suggest it [AI] won’t have an impact anytime soon,” adds a paraplanner at a mid-sized firm specialising in retirement. “When dealing with money, nothing can beat a personal relationship with an adviser you can trust.”
It’s that personal ability to deal with the emotional side of investing that some advisers believe will remain key to their ongoing value, regardless of how sophisticated AI may become.
“I don’t think you can take the emotion out of investing so I’m not sure it will be a tool in the near future,” a sole general adviser adds. “Advisers can… take far more into account than AI can at present. It might work for passive investors but not active ones.”
“I feel that clients expect – and deserve – the personal touch. But if AI can make processes simpler, more homogenous and streamlined, this can't be a bad thing,” comments an adviser at a larger retirement specialist.
Protecting consumers
Like any new technology, there are concerns as to how AI might be misused as well as concerns around accountability for errors, fraud-related risks and the suitability of AI-generated financial advice for individual client circumstances.
“I am concerned it may lead to more scamming and people taking unregulated advice,” says one paraplanner. “Hopefully the positives of human contact and advice will prevail.”
“There are very real dangers with AI now it has been unleashed…No doubt cyber criminals are already looking at ways to make hacking scams easier, wider ranging and faster, using AI,” adds another paraplanner.
“If you cannot control the internet, then you have zero chance of controlling AI.”
AI in short
Despite these concerns, it’s clear that there is optimism about AI in terms of how it can potentially help with the burden of administrative duties and therefore free up time to spend on other more valued-added activities.
A few advisers have already seized the opportunity to explore what AI can do with both hands, while many more are keeping a watching brief on it, dabbling with its potential to support human-led document generation.
Although the majority of advisers in the research think AI has the potential to transform firm efficiency and/or potentially support simplified and lower-cost advice service, no adviser is overly concerned it will put them out of a job. The need for a human-centred, relationship-driven advice remains unassailable.
A greater concern among advisers and paraplanners is the potential for AI to deliver incomplete or inaccurate advice, or to be used by scammers and hackers. But these fears could be allayed if the technology becomes part of daily working life and is clearly regulated.
As generative AI continues to evolve at breakneck speed, the big challenge now is for regulators – not just advisers – to keep up, so the technology’s potential to support and enhance the advice process can be realised safely and responsibly
[1] Innovation, AI & the future of financial regulation | FCA
