Artificial intelligence is a giving the financial advice sector the upper hand in the race to roll out advice to more Australians.
While it is in its early days, tools that enable advisers to produce meeting notes, review a client’s finances, produce a statement of advice and streamline the process of dishing out personalised advice are emerging in the market.
Opex Consulting has been developing a solution called Informed Financial Future for the last four years, which launched to early adopters in September this year.
An early adopter told director Paul Campbell that this has saved up to 70 per cent of their time.
“[Informed Financial Future] uses AI and supercomputing capability to dramatically reduce time and cost, but importantly deliver a solution which engages and demystifies advice for the client,” Campbell tells Professional Planner.
“For us, AI allows us to automate and streamline what are presently time consuming and laborious tasks. For practices and advisers, AI should allow them to see more clients and ideally reduce the overall cost of advice so that more Australians who need advice can get access to quality advice.”
The advice sector will evolve significantly over the coming years on the back of better access to AI.
“It will mean more capacity to see more clients,” Campbell says. “The technology is giving all involved quicker and more accurate solutions and outcomes, enabling us to deliver higher quality and trusted advice.”
Building the quadrumvirate
Padua Solutions combines human intelligence, advice, technical strategy and compliance experts with artificial intelligence. Put simply, it’s a financial advice engine that understands more than 2000 advice strategies.
“We’re able to support superannuation fund and other product provider members and qualified advisers with digital advice capabilities, and human resources covering advice, technical strategy and compliance,” co-CEO Matthew Esler says.
“Our driving goal is to reduce the time is takes to produce high quality financial advice, which will have the desired impact of making financial advice more accessible and affordable to more families.
“We have halved the time it takes to produce high quality advice in the past 12-18 months, and we believe we will continue on this trajectory with a further 50 per cent reduction expected in 2024,” Esler says.
Filling the advice void
Your Beautiful Life was created to directly address key issues plaguing the advice industry. The tech has been co-founded by the past CEO of investment app Raiz Invest, George Lucas, who says the financial planning and wealth management sector is ripe for disruption.
YBL works by using a number of large language models simultaneously, enabling an adviser to have a natural conversation with a client, add any important documents, and leverage the adviser’s existing technology solution to develop a Statement of Advice within minutes.
“It’s difficult to overstate the impact this will have on advisers and their clients,” Lucas says.
“By reducing the time and effort it takes for advisers to provide advice to clients, we can enable them to focus on the client relationship, strategy and value-add services rather than repetitive data entry, analysis and compliance. The client gets a far better experience, and if advisers choose to lower the cost of their services, a more affordable one.”
Locked in talks with a range of industry funds, fund managers and exploring distribution channels, Lucas says the response to the tech has been overwhelming. “We are hoping to make announcements on this over the next few months,” he says.
AI represents a true step change in capability, ultimately ensuring that more Australians are better set up for their retirement, Lucas says.
“Like many other Western economies, Australia is facing an advice gap, and the need to solve this is becoming urgent,” he says.
“Five million Australians are expected to retire between 2021 and 2027, but only a small portion will be fully self-funded or rely on the age pension.”
At the same time, Lucas says, around 80 per cent of Aussies don’t use a financial adviser far higher than the US and UK.
“We think AI will catalyse the growth of the advice industry,” Lucas says.
“The adviser is never going to be replaced by AI – the adviser will stay central to the process, but can use AI as a co-pilot and stay more focused on giving the client a better experience. In addition, by opening up access to a market beyond the most affluent, advisers will be able to grow their customer base and grow their business.”
A word of caution
But AI is not without its issues.
Some AI platforms have been found to have ‘hallucinations’ which in the recent OpenAI saga, has resulted in reports of people’s personal data showing up in public records.
“When it comes to personal financial advice, an AI model has to be stable, keep people’s personal data private and be beyond 99 per cent accurate,” Lucas says.
“Even using a mainstream AI tool to generate 95 per cent accurate results is not good enough when someone’s life savings are on the line.”
It’s very early days in this space, says CEO of advice consulting firm Encore Advisory Group Tom Reddacliff, who works with practices that are implementing AI.
“For a number of years we’ve had solutions directed at clients and super fund members, where those providers have worked out its smarter to work with advisers versus going direct,” Reddacliff says.
“But AI tools that are targeted purely at the advice process are very new. These solutions will typically work with advice-specific tech tools and prioritise tech stack connectivity.”
For businesses looking to introduce AI, Reddacliff says the first step is to get your team involved in properly documenting the ideal existing process.
The next step is to use AI to automate some of these processes with a goal to cutting existing processes by 50 per cent.
It should result in a reduction in the cost base, making more clients economically viable. This tech could also ultimately provide more opportunities for entry-level advisers, he says.
“We see a big divide in top line growth and profitability in businesses who seek to invest and scale,” Reddacliff says.
“They will invest in AI and the gap will widen. AI that connects to front end client technology stands to also transform the client experience in terms of interactivity and efficiency of task execution.”
