Why advisers should embrace AI’s potential

“Those that have thought about client-first models where technology is seen as a whole-of-business enabler have started to, and will increasingly, see benefits from AI. Such developments are currently strongest around the areas of compliance and risk management/prevention, but also extend into enabling business development, client-servicing capabilities and enhancements, as well as portfolio-modelling support and execution.”

He does, however, expose a fundamental problem with embracing these improvements. “AI is only as good as the data it draws on, and this remains a gap for many advice businesses,” he says.

Staying in lane

In all this, it is important not to confuse AI with robo-advice. The latter aims to replicate the role of an adviser, while the former should increase efficiency with a human adviser still placed front and centre.

“Our long-term plan pivots around the role of the human adviser and their relationship with the client to help them understand their goals, understand their objectives, think through strategies for achieving those objectives and encourage them to take action,” says Mr Goss.

“When we think about AI and machine learning, we think about what the opportunities are to enhance the value that advisers are delivering to make their life easier – to help them enhance the outcomes that their clients gain.”

Distribution Technology has begun to use AI in the form of machine learning, specifically around pattern recognition, for its latest psychometric questionnaire instrument. It is doing so in order to build “consistency challenges” into the process, a change Mr Goss says enables patterns within the data to be analysed. For example, if a client came out as risk profile five, but answered some questions as risk profile seven, the adviser could then start a further conversation.

“Machine learning could be used to identify potential patterns in both investment and investor behaviour to provide advisers with prompts and considerations,” he adds.

Mr Goss says AI developments in other industries could be replicated into the financial planning process. “The latest cars have nudges to help you stay in lane, so nudges [could] help ensure that a client’s portfolio stays suitable,” he says. 

“This is all about looking at the data, establishing helpful patterns, and playing those back to advisers in a way that’s helpful as part of their relationship with their client.”

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