Your IndustryMar 17 2023

Could ChatGPT replace advisers?

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Could ChatGPT replace advisers?
Google is tipped to soon launch a competitor to ChatGPT. (Cottonbro/Pexels)

ChatGPT, an artificial intelligence chatbot launched back in November, has been labelled a threat to the financial advice profession - particularly for smaller firms.

The AI bot can answer questions on pensions, protection, investments and stocks and shares Isas, and experts reckon it is not long before the technology could deliver suitability reports.

But some believe ChatGPT could go further to disrupt financial advice, replacing smaller advice firms altogether.

Chief commercial officer at software firm AdviceBridge, Bruce Ely-Johnston, said in a blog this week (March 14) “it may sound a bit Terminator-esque to suggest that this kind of AI holds the power to wipe out small advice firms”.

But he said it won’t be long before a large technology firm plugs it altogether and takes ChatGPT directly to consumers. 

If you think this of no concern and cite robo-advice’s downfall, then you need to get up to speed and understand the difference.Bruce Ely-Johnston, AdviceBridge

Google is tipped to soon launch a competitor to ChatGPT, while Chinese tech giants have also been playing catchup to unveil rivals.

ChatGPT was created by the Microsoft-backed firm OpenAI, and this week its latest version ‘GPT-4’ was released, which claims to exhibit “human-level performance”.

“If you can ask it a question and it can analyse information – your CIP [central investment proposition], for example – and draw conclusions and recommendations, then why have a human?” said Ely-Johnston.

“If you think this of no concern and cite robo-advice’s downfall, then you need to get up to speed and understand the difference.”

Ely-Johnston described Chat GPT as a “souped-up version of Google search”, but rather than return a list of articles for you to click on each and read through, it reads them itself.

Most [advisers] are probably only using 10 per cent of the opportunity and power that technology can provide.Bruce Ely-Johnston, AdviceBridge

“It then pulls out the most interesting bits from each, combines them and then writes an answer to your query,” the chief executive explained.

“Currently, the interface [of financial advice] is a human adviser. But what’s to stop that from becoming a ‘human-image’ adviser that you can interact with?”

“Do you really think a prospective new client is going to wait six weeks while you onboard them before you provide a recommendation, when they can get the answer within 10 minutes?”

Could a client trust ChatGPT over an adviser?

Ely-Johnston compared robo-advice and ChatGPT through the analogy of Wall-E and the Terminator.

While he argued that robo-advice ended up posing very little threat to the world of financial advice, much like the non-threatening Pixar character Wall-E, he reckons the disruption potential of ChatGPT better resembles a cyborg assassin.

“Robo wasn’t ‘advice’, but ChatGPT could be,” he explained.

Countering arguments that ChatGPT will not be trusted by clients, Ely-Johnston said technology can already take on much more complex tasks than the advice profession realises.

It’s the soft skills part of an adviser which will never go away, no matter how good the tech gets.Ben Hammond, ChatGPT

“As much as I believe technology should only be used to support advisers, currently advice firms aren’t engaging with advanced technology enough to achieve some of the amazing benefits,” he went on.

“Instead, most [advisers] are probably only using 10 per cent of the opportunity and power that technology can provide.”

“If you can input your details and it make a recommendation across multiple elements, that is, keep some cash aside in case of x and y, amalgamate these two pensions on this platform, increase your pension contribution by x per cent and so on, then that already feels like a more knowledgeable and understanding suggestion than, say, stick all your savings in MPS-6.”

ChatGPT replacing advice ‘step too far’

Others in the industry have not been so quick to predict a ChatGPT takeover of financial advice.

Director at Altus, Ben Hammond, said ChatGPT could enhance financial advice, certainly, but he reckons a world where it replaces advice “is a stretch too far”.

“I’ve seen other blogs about getting it to write suitability reports,” said Hammond. 

“It might build 80 or 90 per cent of it, but there will always be the customer sentiment the adviser needs to take into account. It’s the soft skills part of an adviser which will never go away, no matter how good the tech gets.”

Fundamentally, way more discussions need to happen for someone in their late 50s.Mike Barrett, Lang Cat

Hammond can envisage ChatGPT propping up simplified advice, but for more complex clients - ie, those hundreds of thousands richer - he does not think the AI chatbot would ever be enough.

Director at the Lang Cat, Mike Barrett, agreed with Ely-Johnston that the adviser profession is behind the curve in terms of technology adoption when compared to industries like banking.

But despite the scope for improvement, Barrett said full-blown financial advice will almost always be delivered face-to-face, even if it’s via video.

“We’re already seeing face-to-face interactions dominating in client segments approaching retirement.” 

Lang Cat research from 201 advice firms found their average client was aged 59. This is compared to the average age of a customer using a direct-to-consumer investment platform like Hargreaves Lansdown, Vanguard or Interactive Investor, who is in their mid to late 30s.

“Fundamentally, way more discussions need to happen for someone in their late 50s,” said Barrett.

“The value is the discussion and peace of mind that yes, they can afford to retire. And a lot of advisers deliver peace of mind when people die.

“Tech should and could be doing a lot more, but face-to-face is what customers value.”

Another forgotten tech trend?

Some in the advice profession are hesitant to jump on the ChatGPT bandwagon when they look back at the trail of forgotten tech trends which have grabbed headlines over the years.

Founder of OpenMoney, Anthony Morrow, acknowledged the “hyped excitement” around the AI chatbot, but said this is usually the case with a new tech breakthrough.

“Take blockchain. Years ago, people said it would change the entire whole world. But now it looks like it will be what it intended, an accurate ledger with companies and accountants being the beneficiaries.

“What’s happened to the Internet of Things? And the metaverse? That’s gone down the pan. There was all this copy around needing to embrace it and customers living as avatars, now what?”

But for Morrow, the main concern is who sits behind the data set ChatGPT is based on.

“One of the problems these chatbots have is they come off a handful of data sets, and the owners can’t ensure there aren’t any inherent biases,” Morrow explained.

“What you put in will determine what comes out. You need someone to support the output. How do you differentiate yourself?”