Paul McNamara, chief executive of Evalue, also thought there were concerns around how AI decisions based on big data sets could become regulated but thought there were more “urgent and bigger opportunities” than “broad data use”.
Mr McNamara said it was clear in UK regulation that advice required an in-depth understanding of the consumer, so if AI could help take full account of that person’s circumstances and attitude to risk, it could provide advice within regulatory terms.
He added: “What we need from AI is for it to use in-depth, personal data rather than broad data about the overall market. This could help advisers with elements of the advice journey such as the fact find or getting data to show this understanding."
Another issue raised by Mr Taylor was the problem surrounding ‘implicit biases’ held in data which could manifest itself in financial decisions.
He said: “This technology is built around data and it’s very hard, if not impossible, to know what part of that data is being used and what biases that data holds.”
Mr Taylor had seen examples where a firm was training a model to predict risk on data which had an implicit bias on gender and ethnicity and that this model then underwrote policies in line with this bias.
Mr Firth agreed there was risk of this bias in all aspects of AI, but said firms could mitigate it by “picking the right data”.
He said Wealth Wizards used a small set of data — selected by choosing good advice cases across different circumstances and sections of society — to manage the bias as best it could.
According to Mr McNamara, bias was a particular problem in financial planning data sets as such data could be biased “up-market” due to the extent of data based around wealthy individuals.
Mr Taylor also thought there was a potential risk of consumer detriment if the regulator didn’t “keep up” with changes in technology and the production of AI, but Mr Firth disagreed, adding “if anything, AI is going too slowly in the marketplace”.
The regulator was becoming “much more enthusiastic” about innovation and technology, according to Mr McNamara, as long as it was based around the principle of “better outcomes for consumers”.
A number of advisers innovating within the AI space have sprung into the market lately, with Rosecut being the latest robo-adviser to launch.
But robo-advisers have come and gone in recent years, many citing cost problems for their departure.
In May Investec closed its Click and Invest robo-advice business following two years of losses which amounted to about £32m.