Analysing AI’s Impact on Financial Advice, Part 3

Saturday, April 13th 2024, 6:58AM

by Clive Fernandes

Throughout this series, I’ve outlined the key functions being automated through AI, from back-end processes to customer-facing apps and platforms. Viewing AI as an enhancer rather than a universal solution is important, so the key is in…

Balancing Capabilities Across Humans and Bots

The rise of interactive large language models (#LLMs) democratises access to knowledge. This leads to flattening organisational structures while proliferating best practices and policies. Moreover, AI technology’s ability to extract information from emails, recorded discussions, and other resources helps build a valuable repository of organisational insights, making it easier to onboard new talent or customers.

Instead of viewing AI as a substitute for human advisers, we must recognise their potential to reduce service costs, improve efficiency, and deliver more tailored customer experiences. However, financial advisers should focus on cultivating organisational AI literacy to prepare for the impact of LLMs. This could encourage staff to use AI models, provide training, develop strategies for leveraging technologies, and rethink structures to address #futureskillneeds and be more responsive.

Robo-advice isn’t a catchall solution yet. Still, we must ensure we’re ready for when it becomes a dominant force by ensuring the right data is in place to facilitate seamless integration. After all, data is key. Utilising proprietary data and market insights while ensuring they are easily adaptable for AI processing is the key to differentiation and achieving success for financial advisors.

At National Capital, we have run projects using AI and machine learning to map client journeys and determine which journey best suits their needs and profiles. We’re also continually refining our skills, policies, and practices to ensure our team gets the most out of the intelligent tech solutions available.

Many financial advisers, particularly in the SME space, could experience job insecurity due to the prolific use of intelligent technologies. However, AI is a resource, not a replacement. Intelligent technologies allow our industry to automate manual, time-consuming processes, freeing advisors to provide value-added services and #humantouchpoints. After all, the real value of advisors is in managing human behaviours and coaching investors through their emotions to remain on track. They’re there to guide customers, often acting as an insightful voice of reason.

Robo advisers currently must be fed information, operating reactively rather than proactively. Plus, the technology still has limitations regarding accuracy and security. Conversely, advisers can consider the specifics of a person’s situation and ask the right questions, developing the right understanding and context, identifying issues, and agreeing upon goals with customers.

The human touch is now a defining factor in financial advisors' services. Still, developments in AI can change that, so every person in this industry must keep an eye on this fast-growing phenomenon.

Clive Fernandes is a director at National Capital.

Tags: AI