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How automation could change the advice industry

How automation could change the advice industry

The role of the adviser is expected to become more “meaningful” amid the emergence of automated services, according to a report.

Artificial intelligence platform Rainbird said nearly three quarters (72 per cent) of financial services firms were planning to invest more in automation over the next five years.

On top of this, of the 100 large UK firms polled by the firm in August, 94 per cent of financial services firms were planning to increase investment specifically in AI over the same time period.

Chief executive of Rainbird, James Duez, thought the expected rise in automation and AI in financial services would make the role of the adviser “more meaningful”.

He said: “Over 15m UK customers will pay for automated financial advice, according to research from Deloitte.

"[This research] shows the robo-advisory market in financial advice is growing to encompass everything from pension products to mortgages.

“Financial advisers will increasingly be performing specialised tasks that machines cannot. 

“As machines take over the number-crunching, financial advisers will be freed up to build rapport with customers, understand unique customer circumstances or investment goals — and tailor their advice accordingly, supported by tools that can ensure adherence with the regulations.”

Mr Duez thought this meant there would be an increased emphasis on specialist advice work.

He predicted there would be a rise in the number of “high-skilled specialist advisers” who worked in teams — such as a financial hardship team to deal with difficult cases such as people in heavy debt, or high-net worths who did not have typical needs.

Mr Duez added: “Financial advisers will increasingly be performing specialised tasks that machines cannot.

"A new generation of AI can replicate human reasoning and make inferences from data, but it cannot empathise with people.”

If automation were to take off on a large scale this would also lower the overall cost of advice, according to Mr Duez, who thought a whole new section of society who may not be able to afford a traditional IFA would have access to financial services as a result.

Earlier this year, research showed the gap between those with access to affordable financial advice and those without had widened in the past four years.

But the research, published on October 2, found the main barrier inhibiting the adoption of AI and automation for firms in the financial space was technology’s lack of transparency.

Earlier this year Christopher Woolard from the Financial Conduct Authority said there was a growing consensus that AI in financial companies needed to be ‘explainable’ but that it was up for debate at what level that explanation needed to be — an expert, a chief executive or the consumer themselves.

Experts have since argued that robo-advice based solely on artificial intelligence — “true robo-advice” — could not be fully regulated because the decision process was not transparent and therefore impossible to track back.

Rainbird found another key barrier to automation and AI in the financial services space was a “lack of human talent” in the technology sector.