“AI can also identify those aspects of advice that are likely to be most relevant to the consumer. This can be identified and addressed in a report, so that the adviser can spend more time focusing on the aspects of the advice that matter to the individual.”
Knowing your customer
This is only the latest phase in a process that has been developing for some time. As Ben Goss, chief executive of Distribution Technology, notes: “If you go back 15 years, the industry was using a pen and the back of an envelope to assess risk and in some cases build portfolios. There was a time when technology being used in the advice process was seen as a tick-box exercise, but today it’s seen as a really important part.”
Recent developments in AI look set to change the landscape even further. One of these, according to Chris Ford, co-manager of Smith & Williamson’s Artificial Intelligence fund, is robotic process automation, which is likely to affect not only adviser practices but the whole of the personal finance industry.
Mr Ford explains the relevance for intermediaries is that such technology can synthesise and optimise administrative tasks, largely in the back offices and middle offices of financial services institutions, which could be particularly helpful for satisfying ‘know your customer’ rules.
“[Know your customer is an area that’s] heavily regulated, lots of sanctions and fines if you don’t do it correctly; that’s exactly that type of stuff that AI, and RPA in this instance, is extremely good at – where humans tend to make mistakes, don’t pay attention, go for a restroom break, go for a coffee, have lunch. It then frees up humans to do the things that they’re good at.”
Data gap
Still, questions have been raised as to whether, on some level, advisers should be concerned about the possible impact of algorithms on the future of their roles.
Andrew Todd, chief technology officer at Iress, explains that the risk of developments of this kind will vary from company to company and should be minimal for modern advice firms.
“If the business is relationship-based where success depends on quality of service, engagement, efficiency and client outcomes, AI should be embraced,” he says.
“From a competitive perspective, advisers should fear AI in the hands of their competition who are utilising it to create a better experience for their clients. Operational efficiency and higher-quality servicing can be supported by AI, and these are key to winning in a competitive market.”
But Mr Todd adds that AI is more about supporting the role of an adviser, rather than replacing it.
