AI will be utilized by planners to engage with low-touch clients more frequently – those who typically do not receive much interaction. AI can compose letters and aid in enhancing clients’ financial literacy through education.
Hall envisions a significant role for AI in assisting with compliance in the heavily regulated financial planning and investment industry.
AI will comprehend the investing regulations and can pinpoint errors made by advisers.
“As we progress, you should be able to input your recommendations and it will flag any inaccuracies,” Hall explains. “It should also provide you with the correct information upfront to avoid compliance issues.”
For example, AI could prevent a client from exceeding contribution caps by depositing too much cash into their super fund, which can result in a costly error.
Last year, a report by financial research firm Rainmaker Information indicated that the shortage of financial planners is already a concern and is expected to worsen in the future.
Finding new solutions
The number of financial planners has dropped by nearly half since December 2018 following the Hayne royal commission into the banking and financial services sector. Concurrently, the demand for advice is projected to increase due to a 17% rise in the number of pre- and post-retirees (individuals aged 55 to 84 years) over the next decade.
Kenneth Hayne. Elke Meitzel
“Australia’s financial advice industry must remain agile and proactive in finding innovative solutions to bridge the adviser shortfall, ensuring that financial advice remains accessible and reliable for all Australians,” says Alex Dunnin, executive director of research and compliance at Rainmaker Information.
Sydney-based financial planner James Gerrard is already leveraging AI in his practice of 15 advisers.
“Compliance requirements have been increasing in the financial planning industry over the past five years. To do the same amount of work requires more compliance, which drives more administration costs in our business, which reduces our profit margin,” explains Gerrard, of FinancialAdvisor.com.au.
“So I’ve been looking to introduce AI to maintain value with our clients and not have to go to them and increase our prices, given the increased amount of time we’re spending on non-core advising activities due to the red tape that we have to abide by.”
Gerrard uses AI to have his staff generate videos of him discussing financial news and what it means for clients, such as the latest interest rate decision by the Reserve Bank of Australia. “Rather than tying the adviser up for hours, we can have one of our support staff get something out in less than an hour and keep our clients updated with communication,” he says.
Hybrid advice
FinancialAdvisor.com.au provides digital financial plans and includes videos where Gerrard explains why different parts of the plan are important. The practice also records video calls with clients and uses AI to generate a summary of the call with key points and action items.
Futurist Ross Dawson envisions that AI will ultimately be employed to offer hybrid financial advice, combining digitally provided advice with human advice. “You are bringing together the competencies of the AI together with the unique capabilities of the individual in order to provide the optimal outcome,” says Dawson.
Financial advice will become more tailored to the individual’s situation, outlook, risk profile, current assets, and so on.
He believes there is a significant untapped market for low-cost digital advice in Australia and AI can help address that. “There is a potentially new and extremely large market for completely digital advice,” he says.
Simultaneously, there is a huge opportunity for humans and AI to collaborate in providing financial advice, and financial planners should start integrating AI tools into their practices, he suggests.
“Financial planners who fail to use technology to support their work will fade away,” he warns.
how-ai-can-help-with-financial-advice
