Financial advice will be less vulnerable to risk and easier to scale once more providers and firms plug into data which is regularly updated to match client suitability, according to ValidPath.
Angus MacNee, chief executive of ValidPath, said: “If we think about the future of financial advice, it will involve having access to datasets that are updated in real-time, eg, from open APIs [application programme interfaces] such as Open Banking, and analysed in real-time with respect to a clients objectives, circumstances and attitude-to-risk.
“As we look to the future, dynamic data will begin to influence the way financial advisers service their clients as a dynamic approach to financial advice and managing client suitability supports better client outcomes at scale with less risk.”
MacNee pointed to ChatGPT, which OpenAI launched last November. It has been described as a “dialogue format” which answers follow up questions, admits its mistakes, challenges incorrect premises, and rejects inappropriate requests.
If the advice and product or portfolio implementation is more suitable, then it is more likely to deliver a better client outcome, and to do so with less risk.Angus MacNee, ValidPathMacNee reckons technology advancements like ChatGPT will give clients greater power to review and compare services easily online, increasing the transparency of financial advice.
The chatbot itself has speculated that technology will have a major impact on the financial advice sector in the future.
“Technology will enable more efficient communication between financial advisers and their clients, allowing for faster and easier sharing of data and information,” the AI chatbot has said, quoted by MacNee.
“It will increase the transparency of financial advice, allowing customers to review and compare services easily online.”
But MacNee was quick to caution that while ChatGPT “is indeed a revolutionary development” in the direction towards general AI, it is important to remember that the process for providing financial advice today is the same as it was yesterday and will be in the future.
“It is based on understanding the client’s objectives, circumstances and ‘attitude-to-risk’, putting in-place a suitable product or portfolio to support those considerations and then monitoring and adjusting for ongoing suitability,” he said.
“Suitability is the key with financial advice. If the advice and product or portfolio implementation is more suitable, then it is more likely to deliver a better client outcome, and to do so with less risk.”
ruby.hinchliffe@ft.com
