Failure to plan for data-hungry AI will have consequences

The AI train is leaving the station but few financial advisors have their bags packed ready for the journey - nor do they necessarily know where they’re headed.

Friday, November 15th 2024, 6:05AM

by Kim Savage

According to Clive Fernandes, founder and director of AI fintech Sevaka, even some of the major KiwiSaver providers, managing millions of dollars of funds, are behind in their efforts to build a data knowledge base in preparation for the widely-predicted accelerated adoption of AI.

“Building a data knowledge base is the most important step people can take. AI is useless without data.”

“But it’s not just about client data, it’s about data related to your internal processes, it’s the best practices, it’s the staff who know what to do,” he said.

“Right now a lot of that is very messy, it’s in people’s heads. We need to bring all of that down into a format that we can then feed into these AI tools of the future, so AI can do its job.”

Clive Fernandes said customer service was one obvious area but it applied to other parts of businesses as well. Irrespective of whether businesses were planning to embrace AI tools in the short term, recording data and documenting processes would help to improve business practices overall.

“It’s a great step to take now, knowing it’s going to have a positive effect, but then you can leverage that work you’ve done now, to see some great benefits down the line in future.”

Give clients the early “heads-up” in agreements

If advisors did not give careful thought to curating policies around the use of AI and how it might be a part of their business now and in the future, they risked having to rush in a “cookie cutter” AI policy down the track, said Clive Fernandes.

“We need to prepare ourselves and our interactions with our clients, so they’re signing up right now, knowing that that’s what we’re planning to do, we’re planning on using an AI tool to help me to understand you better.”

“There are a lot of concerns around privacy, concerns about security when it comes to AI, we need to think about these things right now.”

Over time, clients were expected to become more comfortable with the use of AI in the same way people adapted to internet banking. Although there would no longer be a need for annual reviews.

“AI is going to allow us to find out what’s happening in a client’s life at any given moment. We will be able to continuously engage with the client.”

Clive Fernandes said rather than replace financial advisors, AI would allow them to focus on being a strategic guide for their clients.

Tags: AI