AI poses 'moral question' for advice firms

AI poses 'moral question' for advice firms

Artificial intelligence is likely to have an impact on paraplanners' workload, posing a moral dilemma for advice firms, according to this week's FTAdviser podcast guests.

Financial Technology Research Centre founder, Ian McKenna and Chet Velani, chief executive of EV, shared their views on what impact artificial intelligence (AI) is likely to have on the financial advice profession. 

Velani and McKenna outlined some of the potential benefits AI poses for the world of advice and gave examples of things advisers can already be doing to integrate artificial intelligence into their business models. 

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But the pair also raised concerns over the potential impact the adoption of AI will have on the paraplanning profession. 

McKenna pointed to research that suggests artificial intelligence will remove 40 per cent of the workload from professional services. 

“There is a huge moral question, coming up not just for advice firms, but society in general,” he said. 

Velani also shared his insights on some of the dangers posed by artificial intelligence.

“For a lot of larger financial institutions at least, I can imagine a lot of the compliance teams combing through a lot of the services used with AI. 

“You’ve got to be 100 per cent comfortable with the services that are going to go out there for people to see," Velani said.

“The key thing for me is that it is still pretty much in its infancy. We’re going to see a lot of evolution - the amount of money that we’re seeing pumped through, it’s enormous."

Velani added: "It is not just AI. AI is not going to come along and be a silver bullet. In financial services, over the last five years in particular, we’ve often spoken about technology coming along to really drive efficiency, drive engagement and AI is part of that. 

“It’s not just a case of implementing AI. We should be looking at AI along with other approaches across technology, across hybrid and digital advice, across algorithms that are used to really build journeys and processes that are focused on the end individual."

IT budgets

Most financial advice firms would need to triple their IT budgets to allow their businesses to benefit from current technological advances, said McKenna

He said: “Advisers’ IT budgets historically have been relatively modest.

“I would say most firms need to be looking to provide for an IT budget of say three times whatever they are spending at the moment.

"But they need to also look at what this will that enable them to do. [The] really, really important thing is that you have swept every bit of functionality out of the software that you buy. So many advisers complain they only use 10 per cent of X or Y packages," he said.