Patrick Ring, Reader in Financial Services at Glasgow Caledonian University, outlines why adopting AI is an essential strategic decision for financial advisers.
Overwhelmingly, clients who pay for advice appreciate its benefits. The Financial Conduct Authority’s ‘consumer duty’ requirements placed upon firms are also helping consumers to pursue their financial objectives. However, advice can be costly to provide, particularly since research shows that most clients want face-to-face advice. And this cost has exacerbated the ‘advice gap’ - the disparity between people who seek financial advice and those who can’t access it.
It’s no wonder, then, that articles now regularly appear in the financial press exhorting advisers to adopt AI to simplify processes, create efficiencies, and reduce costs. There are predictions that in the next few years AI will underpin a significant proportion of advice provided. Moreover, events such as FCA Techsprints, AdviceTech Live and the Lang Cat’s recent ‘AdviceTech Catwalk’ suggest this is not something that advisers can ignore if they want to maintain or enhance their position in the marketplace.
Future Finance’s whitepaper on Financial Advice and Wealth Management – part of its Technology Insights Series, – looked at key opportunities technology offers advisers, as well as the barriers faced in implementing those opportunities. AI has the potential to help firms overcome the difficulties of working with multiple systems/platforms, to reduce the time and cost of administrative tasks and document production, as well as meeting regulatory requirements more efficiently and cheaply.
As more fintechs work with advisers, the potential of AI is becoming a reality. In turn, adviser firms must make sure they have the technological skills and innovation culture necessary to embed and exploit new technologies. They need to understand whether, and how, specific forms and applications of AI can be integrated into their business. This may not drastically change their business model, but will certainly require a level of expertise and understanding of technology within the firm itself. Future Finance’s whitepaper looks at this, identifying key technologies to watch and providing tips on how to get started in understanding AI as part of a firm’s innovation process.
Artificial intelligence is going to empower those firms that grasp its opportunities. It creates the prospect of taking on more clients, enhancing profitability, and perhaps even widening the affordability of financial advice. What is certain, however, is that success in the future will require advice firms to engage in a process of innovation. Future Finance aims to support firms with that ask.
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