A majority of advice firms have or are planning to integrate artificial intelligence (AI) into their practice, but a report from Netwealth has warned against the risks of putting client information into public third-party systems like ChatGPT.
The platform provider’s ‘Network 2023 Advice Tech Report, Humans and Machines’ found roughly half of financial advice firms are currently either testing (11 per cent) or thinking about integrating of artificial intelligence (34 per cent) into their practice.
“As a word of warning, remember to never upload client details or personally identifiable information to any public AI system, like ChatGPT,” the report said.
Some 50 per cent of the firms say using AI will greatly improve their business, and around seven in 10 of the firms considering AI are hoping it will them assist with their marketing activities.
Additionally, the report states that “[of] the AI interested advice firms, 65 per cent anticipate increasing their AI spend in the coming year”.
“Some are leveraging ‘embedded AI’ – which is the AI built into their current software,” the report said.
Specifically, 37 per cent use AI in their CRM system, and 24 per cent use it in their investment or superannuation platforms.
Additionally, 22 per cent of these firms employ AI within digital advertising optimisation tools like Google Ads, and 17 per cent are considering the new Microsoft Copilot.
“AI interested” firms also expect AI to improve client services (89 per cent) and staff productivity (67 per cent), with minimal concern about job cuts (15 per cent), according to the report.
“What is clear from [the] research is that there is a lot of hope in new technologies including AI to drive more productivity, efficiency, and value in the business and for clients,” it said.
The research for the report was conducted via two surveys in May and July. The first survey – which saw Netwealth interview 102 Australian financial advisers – focused on emerging technologies like AI. Netwealth interviewed 281 Australian financial advisers in the second survey to learn their views on new technologies and their impact on their business.
Lack of confidence
Despite the take up of AI, the report found 63 per cent of advice firms are not confident in their ability to integrate the technology into their operations.
Over half (53 per cent) believe it will take two to three years for their business to be AI-capable and data-driven, while around a quarter (22 per cent) expect to be AI-capable and data-driven in four to five years or longer (22 per cent).
These firms listed personnel, IT capabilities, internal strategy, lack of staff understanding and expertise, regulation and compliance, lack of integration with existing systems, privacy and security, and the immaturity of the technologies as the main barriers to implementing AI.
Despite this, the report said that “humans are extremely proficient at adapting to the next-best technologies”.
“These technologies are often the result of innovation convergence, bringing to life a tool that becomes quickly indispensable to our lives and businesses,” the report said.
