It’s always good to experience a career “first”. This week I was awarded a “Human Writer Certificate” after my articles were analysed and found to have a unique fingerprint. With an increasing number of writers using AI technology, it feels valuable to have the evidence that I don’t.
Nonetheless, I am very aware that my job is ripe for disruption.
Last week, the AI chip giant Nvidia briefly surpassed Microsoft to become the world’s most valuable company. But for most people, I suspect, the game changer will come later this year, when Apple rolls out its AI tech on your phone. The ability to use AI to “write, express yourself and get things done effortlessly” will make it much more accessible and perhaps less scary — if it’s any good, of course.
When it comes to managing your money, opinions seem to be changing rapidly. According to a survey of independent financial advisers (IFAs) and wealth managers by Schroders, 76 per cent think the development of AI applications such as ChatGPT represents an opportunity rather than a threat to their business, up from 57 per cent a year ago.
But then attitudes may not be changing rapidly enough. The same survey found that a full 15 per cent think AI is not going to affect them or their businesses at all.
I think they’re not only wrong, they’re doing their clients a disservice. The technology has already proven itself as a means of automating complex tasks, such as summarising the outcomes of meetings, drafting emails and financial reports, yielding significant efficiencies.
But if AI is going to move from the back to the front office, what will it mean for clients?
What it won’t mean, according to Gillian Hepburn, commercial director at financial advice firm Benchmark Capital, is quick and dramatic change. “I meet fintechs all the time,” she says. “They all show me how they are going to transform the advice market. But too often people come to me with the solution to a problem that doesn’t actually exist.”
Nor will it entirely replace advisers, says Jason Witcombe, a chartered financial planner at Empower Partners, who fully embraces the potential of AI to deliver better service to clients.
“I take the view that our clients pay us for human intelligence rather than artificial intelligence. It’s our judgment and experience that they value and are paying for.”
There’s a widespread deeply embedded notion that humans will continue to be able to better to spot emotions or hesitations that reveal unusual financial dilemmas or opportunities than AI. Advisers make the argument that in volatile markets, sudden changes and unprecedented events can occur that do not have historical precedents — Covid-19 is the key example given — making it challenging for AI to respond accurately.
Others say AI will also struggle to advise on estate planning in cases where family relationships are strained. And there’s always the potential for a Columbo-style “just one more thing . . . ” as they leave the meeting. A human interaction might prompt this from a client, but an automated AI checklist is unlikely to.
But is the industry at risk of overplaying the quality of its “human” support — and underplaying recent technological improvements?
“We all like to think our listening and empathy skills are too advanced to be replicated. But advice businesses historically struggle to scale up due to the personal nature of advice and the inconsistency that is inherent in human nature,” says Ian Millward of Candid Financial Advice. “Ultimately, every question that ever needs to be asked has been asked. AI can model outcomes and provide the most proven answer to every question in an incredibly consistent way.”
As the technology progresses, there is increasing scope for AI to help human advisers understand their customers more deeply.
The technology could glean investment and behavioural-related insights and trends from multiple client conversations. We could see improvements to the risk profiling process as AI platforms generate personality profiles from someone’s online content or LinkedIn profile.
There’s also the opportunity for clients to understand what others in a similar position are thinking and feeling. Ollie Saiman, co-founder of wealth manager Six Degrees, says: “Creating significant wealth can often lead to feelings of isolation and increased separateness from one’s peer group — knowing that others are in a similar position can be reassuring.”
Perhaps most importantly, AI has potential to tackle the vulnerable customer issue that so many advisers struggle with. Vulnerability is a key target in the FCA’s Consumer Duty rules, with the regulator defining a vulnerable customer as “someone who, due to their personal circumstances, is especially susceptible to harm — particularly when a firm is not acting with appropriate levels of care”.
FCA data suggests 53 per cent of adults display a characteristic of vulnerability. However, Schroders found only 9 per cent of advisers categorise more than a quarter of their clients as being vulnerable. Some believe AI could flag vulnerable customers with greater accuracy.
Unfortunately, these advances may not come soon enough. Schroders found only 19 per cent of advisers anticipate incorporating AI into their processes within a year, while 51 per cent said it would be in two to five years’ time.
“The wealth management sector itself recognises that it has historically been one of the slowest to adopt new technologies and to digitally transform itself,” says Heather Dawe, chief data scientist at information technology company UST. “It’s not likely to become one of the fastest adopters any time soon.”
What it should do, though — if it isn’t already — is to bring down fees. With AI cutting costs in the back office, the price we pay in the front for the human adviser should be much less.
I asked the latest model of the ChatGPT chatbot what it thought. It recommended that clients of wealth managers and IFAs ask for fee reductions by highlighting that they know about the efficiencies that AI brings.
“Clients might consider negotiating for a more value-based fee structure,” it added. For example, performance-based fees, where a portion of the fee is tied to the achievement of specific financial goals, could align the interests of the client and the adviser.
It’s time to have that discussion. And how your adviser responds will be very revealing — it might just be a career first for them.
Moira O’Neill is a freelance money and investment writer. Email moira.o’neill@ft.com, X: @MoiraONeill, Instagram @MoiraOnMoney
https://www.ft.com/content/dc4cb53c-dd70-4c51-a4b4-b46b8720bc2e
