Artificial Intelligence applications in Financial Planning

Artificial Intelligence applications in Financial Planning

How much impact will technology have in AFSL Services?

As we conduct a review of the current AFSL market in Australia and track the pending changes in the evolution of the ‘Dealer Group’ AFSL model, a key consideration is the emergence and influence of Artificial Intelligence (AI).

In this article we delve into where the value lies in the AFSL relationship and how this will potentially be impacted by AI.

At the end of every process is a human.”

Recruit 2 Advice - Financial Planning Recruitment - AFSL Licensing Guide AI Technology

Our view on this is twofold, and we caution against the hysteria surrounding AI:

  1. AI and technological advances will surely have an impact on Advice process efficiencies and client experience (in time)
  2. The AI sector in Silly Valley (Silicon Valley) has a vested interest in hyping up this technology.

Addressing the second point first, and with the advantage of having recently interviewed ‘C-Suite’ Chief of Information and Digital Technology Officers for a senior role, the consensus to how far and quickly AI can transform the Advice Process landscape in Australia were universally the same:

“At the end of every process is a human” and “don’t believe everything that’s coming out of Silicon Valley”

The responses were frank and clearly designed to ‘temper’ enthusiasm by setting realistic expectations on the short to medium-term capabilities and impact of AI.

So yes, in short, it will add value and automate certain processes. Yes, it will drive data capture and advice production efficiency. Yes, in time it may also enhance the client’s experience with engaging with advisers. Yes, over all it will play an important role. But, in saying all of this, there is still quite some way to go until we realise the full impact of these enhancements – until then human interactions will remain key and, in this matter, we are happy to say we share the opinion of the ‘hands-on’ experts. ‘Human lead, technology enabled’ Advisers is a good way to think about the next phase.

So, if you are looking for AI to take your Financial Advice Practice on the fast track to Nirvana then you might have come to the wrong page.

Google AI Machine Learning

Taking a world view for a moment to look at the evolution of AI, the greatest documentary I’ve seen on this topic involves the Google AI Machine Learning team in Europe who are developing a computer program (set up and tweaked with human built algorithms) in an attempt to defeat the World Champion in the most complex game known to man, ‘GO’.

Refer Award Winning Documentary – AlphaGO

Without spoiling the documentary, the computer program does develop predictive capabilities and competes well, albeit with some dramatic fails. Although, its important to note, it is a team of 20-30 humans entering data and constantly tweaking the algorithm to compete with a single person.

In this example, it effectively takes millions of dollars of investment by Google and a huge team of the brightest minds in computer programming to compete with one human.  Relative to Financial Planning, it’s a reasonable anecdote given the complexity of individual client Advice needs, and the myriad of questions and solutions available.

In light of this, when considering how technology and AI can be integrated into your practice, the business partner you choose and the AFSL’s relative value, be wary of claims that wiz-bang technology will solve all of your problems and simply provide Advice for you.

Computer programs won’t do it all for you, it’s the people managing the process.

“You guessed it folks…People!”

The AFSL's view on AI Technology

R2A recently sat down with Matt Brown, Executive General Manager of Personal Financial Services to ask about the evolving landscape in the AFSL sector, and, when discussing the impact of emerging technology (read AI), he pointed to the array of business services atop of traditional licensing as being the true ‘value add’.

Relative to AI and other useful tools, “as business services partner, we are constantly reviewing and testing various tech applications for the potential to create advice efficiencies, plus we provide hands-on implementation support to our network as a business utility.”

He went on to state that feedback loud and clear from advisers across the Fortnum and Personal Financial Services Licensees, is that many advisers are overwhelmed with the number and variety of new technologies and AI tools available. Further, they stated what they need is two things: -

  1. Firstly, guidance & assurance that any technology they use is cyber security safe (as many are not, even when it appears to be an Australian-based solution, data is often sent offshore and / or through less than ideally secured methods; and
  2. Secondly, leadership. Make some bets, select suitable options, tell them what tools to use, then help to set it up and use it properly; And have SMEs to call.

“Our focus is on being a business services group specialising solely in Financial Advice.” Matt Brown

Our Summary:

R2A are certainly open to other viewpoints and don’t discount that AI will have a big impact across many sectors including the Financial Planning Industry, and society in whole.

Silicon Valley and the technocrats in general will push back hard on alternate viewpoints and keep hyping the ‘potential’ of AI and for good reasons, vested.

At present the only interviews and media available on this topic are from the AI experts themselves extolling the extreme advances in humanity they will achieve. Every company with anything resembling new technology appears linked to this world changing technology, including in the Financial Planning space.

It’s more difficult to find objective commentators, and IT experts working in industry themselves who can we suggest are drowned out by all the excitement.

When it’s real it’s real, but it’s not here yet unfortunately.

R2A holds our position that the value in selecting an AFSL remains in robust risk frameworks, corporate memory (people) and genuine value add services and relationships.

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