Our report on the prediction that every financial adviser will have an AI ‘co-pilot’ to assist and work with them in future drew much reader interest this week…
VBP’s David Carney sees a future where every financial adviser, or professional working with financial advice, will have an AI type co-pilot that will assist and work with them.
In a comprehensive article on VBP’s website, following a trip to the US to attend conferences discussing AI and how it fits into financial services and financial planning, Carney writes that a financial adviser could ask this co-pilot to review the data they have on a particular client before a review, for example.
“It could pull up the data and give the adviser a summation of what financial interactions that client has been having – whether or not they have been accessing a client portal, information they have downloaded and other financial apps they may have been interacting with.”
He says this would obviously speed up the whole review process “…and free up the adviser’s time to focus on the interaction with the client themselves i.e. majoring in the human component of the interaction, while the co-pilot could ‘major’ in the data side of the process.”
…this efficiency fix could effectively help with some of the major problems the Australian financial advice industry is facing…
Carney, who is VBP’s Head of Growth, says this efficiency fix could effectively help with some of the major problems the Australian financial advice industry is facing – the shortage of financial planners and that planners in operation are finding it increasingly difficult to service more clients and meet their legal and administrative requirements.
He says the increased use of AI co-pilots in financial advice is one of the three factors that should hopefully change the industry landscape by bringing down the cost while also increasing adviser capacity and making it available to more people. The other two factors are the QoA Review recommendations and being able to use global best pricing through outsourcing.
He says these three things combined should make it much easier and more cost effective to deliver advice.
“Currently, many financial advisers feel like their capacity for clients is capped at around 100 to 120. But by embracing all three factors outlined … firms that are able to lower margins and take market share, will be able to double the number of clients their advisers are able to service,” he says.
…while generative AI will make much of our work lives easier, it also needs to be handled with care…
He also makes that point that while generative AI will make much of our work lives easier, it also needs to be handled with care.
“At the most basic level, generative AI mines or scraps data from a data set – usually the internet – but does not provide any proof that what it delivers is factual. There have already been many instances of AI ‘hallucination’ where nonsensical or untrue answers to questions are provided.”
Carney says financial advisers have legal obligations to their clients around the advice they provide and “…would be foolish to rely solely on anything generative AI provides in response to questions.”
Financial firms also need to consider the security of the client data they hold and how AI might be used.
He says mid to large-size firms that naturally have more clients, and therefore more data about those clients “…could be at an advantage as they would be able to train and use the AI in their own ecosystems, effectively quarantining it and ensuring the security of those systems.”
…data would potentially be compromised…
But Carney says if it were to leave a business’s ecosystem “…and start sourcing data from the internet, while still having access to the firm’s data, that data would potentially be compromised.”
He adds that in the absence of any explicit laws around the use of generative AI in Australia “…any financial planning company considering using generative AI, needs to have written policies in place about how client data is being used to train AI and clients need to be made aware and approve of these policies.”
In his wide ranging article, Carney also delved in some detail into how:
- Generative AI offers more potential to target marketing communications right down to an individual level. In the US he saw examples of marketing that can offer hyper-individualised content based on an individual’s response to certain questions, as asked or inferred by an AI prompt.
- AI will help financial planners not only offer an engaging and appealing service but by gathering this information properly to the onboarding process via machine learning, they will be able to provide the client a much better experience once they do actually sign up.
Click here to read David Carney’s full article.
