Artificial intelligence has the potential to revolutionise the advice industry, offering benefits such as enhanced efficiency and accuracy suggests Tom Hawkins, Head of Strategic Partnerships at Charles Stanley. In the following analysis, Tom points out some of the ways that advisers can start to integrate this powerful technology for the benefit of their clients as well as to boost business success.
The potential impact of artificial intelligence (AI) is a hotly debated topic, affecting not only financial services, but society at large. A common worry is that AI might replace jobs, or that people may resist integrating this new technology into their daily lives.
On the other hand, AI also holds the promise of boosting productivity and transforming our work processes. The FCA’s Chief Data Officer has also suggested that “it could also help solve specific challenges, like tackling the advice gap with better, more accurate information delivered to everyday investors” at the City and Financial Global AI Regulation Summit last year (ref note 1).
How is AI currently enhancing advice?
There are various pieces of software and tools that are already enhancing the advice business model, including:
Improved client onboarding – AI-driven tools can significantly speed up the client onboarding process by automating things such as case checking and advice approvals. These tools analyse vast amounts of data quickly, ensuring that all necessary checks are completed accurately and efficiently. This reduces the time advisers need to spend checking forms, and the time clients spend waiting for advice and improves their overall advice experience.
Speeding up administrative tasks – AI can streamline administrative tasks such as generating letters of authority and conducting compliance checks. By automating these processes, AI reduces the administrative burden on advisers, allowing them to focus more on client interactions and strategic planning. is not only improves productivity, but also ensures that compliance tasks are completed accurately and on time.
Adherence to Consumer Duty regulations – AI ensures that financial advice remains consistent and compliant with regulatory standards. By using machine learning algorithms, AI systems can analyse past advice and outcomes to develop an understanding of what would be the most appropriate for each client. is helps advisers provide best-in-class guidance and ensures each client receives the best possible outcome from advice.
Increased client retention and predicting needs – AI can also help identify clients who may be at risk of leaving. By analysing client behaviour and engagement metrics, it can flag potential issues early on. Advisers can then take proactive measures to address client concerns and improve retention rates. This is particularly important with clients who intend to pass on their wealth to future generations.
How consumers like to engage is changing
People are leaning more towards digital financial planning tools, especially when they can still get some human help. Research from AdviserSoftware.com and commissioned by Dynamic Planner, reveals that 75% of 18 to 34-year-olds, 65% of 35 to 64-year-olds, and over a third of those aged 55+ want to track their investments and access financial planning content through an app (see note 2).
This highlights how important it is for financial firms to go digital, integrating AI software where required, to keep up with changing client preferences and the intergenerational wealth transfer. Younger generations are driving the demand for mobile and app-based financial planning, offering a big chance for the industry to connect with them and boost their education using technology.
The need for human touch remains
There’s no doubt that AI is gradually adapting the world as we know it today. Some argue it’s the next big industrial revolution since the internet in the early 2000s.
But, the need for a personalised human touch will remain.
Despite the demand for digital solutions, the same piece of research revealed that 57% of respondents still prefer speaking to a financial adviser, and 62% want a combination of digital and human interaction.
AI doesn’t possess the intuition and interpersonal skills that we do. This is where advisers must be considered specialists, with an increased focus on the human psychology side of managing money and the ability to develop a deepened relationship between adviser and client based on trust and integrity.
It’s easy to discount new technology
When it comes to new technology, people generally follow a progression such as that below:
1. “I’ve never heard of it.”
2. “I’ve heard of it, but I don’t understand it.”
3. “It’s useful, but I can’t see it changing the world.”
4. “I use it all the time.”
5. “I can’t imagine life without it.”
AI is probably somewhere in the middle of its journey, depending on who you ask. Some people find it handy for certain tasks but could live without it, while others haven’t heard of it or don’t really get it. Not many would say they can’t imagine life without it just yet.
Predicting the path and impact of new innovations is tough, and it’s easy to underestimate them. Often, it takes 10 to 20 years for their full potential to be realized, with small changes adding up over time.
Of course, there’s always a chance that AI might not live up to the hype, like Betamax, Segway, or the Concorde. Remember those?
The bottom line
With all the buzz about AI transforming the advice landscape, it’s crucial for advisers to follow the same advice they give clients during market downturns – don’t panic and stick to your strategy.
AI can be part of an evolution, not a revolution, in your service. Using new technology to enhance your offerings while still providing a personalised service is likely the best approach, as the research suggests.
Take a look at your business model from start to finish. What are the use cases for AI? Where could you implement it to improve your proposition or enhance your service? And most importantly, what are your clients and potential clients asking for?
With many advice firms scheduled to review their activities from 2024 and also to develop their business development plans for 2025 in the near future, it’s an ideal time to include consideration of how your business – and clients -could benefit from greater integration of AI.
Note 1. https://www.fca.org.uk/news/speeches/ai-flipping-coin-financial-services
About Charles Stanley
For more information about how Charles Stanley can partner with your business, contact Head of Strategic Partnerships, Tom Hawkins on 020 3627 3990, or email tom.hawkins@charles-stanley.co.uk.
Important information
The value of investments, and the income derived from them, can fall as well as rise. Investors may get back less than invested. Past performance is not a reliable guide to future returns. Charles Stanley & Co. Limited is authorised and regulated by the Financial Conduct Authority.
About Tom Hawkins
Tom joined Charles Stanley in September 2022 as Head of Strategic Partnerships. Prior to joining, he worked at Quilter for 22 years where he held a number of roles, namely their BDM working with national advice businesses and networks, the Regional Sales Manager for the SW region and he also spent 4 years as their Head of Marketing. Tom is responsible for developing new strategic partnerships with financial adviser firms in the UK to help them deliver standout investment solutions to their clients.
