Using AI in the advice process can open opportunities

Artificial intelligence (AI) has the potential to add considerably to the productivity of financial advisory practices, freeing up planners from routine tasks to focus on the real business of creating wealth for investors. While the use of artificial intelligence in firms is in a nascent stage, many advice businesses recognise AI’s potential to evolve daily operations and bottom lines.

Indeed, AI could supercharge advice firms around Australia – driving productivity, innovation, and improving the client experience. As we speak, AI is becoming omnipresent; many of us are now using it every day in our work and play and to manage our money. The entire financial advice process is likely to be impacted by AI and emerging automation technologies.

Computers have sped up human interactions, and the internet has enabled instantaneous access to information and connectivity. For some time, AI has been used to generate responsive, adaptive or intelligent responses online. Chatbots for example,  make life easier when buying goods or services online. Conversational AI could eventually take this further by allowing real-time interaction via voice to flesh out questions and responses to financial problems.

According to the recent Netwealth AdviceTech Report, AdviceTech and AI are providing advice firms with many new benefits. For example, advice firms are using AI to index document uploading, feeding them into the right parts of our workflow to help process and administer client information. Advisers are using AI to extract data from these documents and directly file that information, removing manual intervention. For some, AI is automatically redacting Tax File Numbers from documents for privacy and compliance purposes, according to the Netwealth report.

AI is also being used by call centre teams to help them respond quickly and consistently or as AI self-service chatbots in the financial services industry. Software applications are also helping to keep client data secure from fraud and cyber-attacks, and helping distribution teams identify which clients need more attention.

Padua Solutions co-founder Matthew Esler says AI is in its early stages of adoption in the advice industry; the uses of AI have generally focussed on assisting in the client discovery or fact-finding process and to respond to initial client inquiries online. 

“AI-powered chatbots can handle routine inquiries, schedule appointments, and provide basic general support responses, improving client engagement and satisfaction,” he says.

“AI can be used record minutes of meetings and the creation of fact find information and file notes. As some licensees have already experienced, this does not come without its risks with comments made by advisers during this process recorded and the potential for advice to be provided in these meetings requires caution. Important considerations include that AI-generated financial advice complies with Australian regulations and laws.  

“Managing this this involves a combination of robust technical measures, comprehensive understanding of the regulatory environment, and continuous oversight,” says Esler.

Within investment management, AI can be used for portfolio optimisation by analysing data and developing portfolios that maximise risk-adjusted returns, as well as to helping to execute trades automatically based on pre-defined strategies or parameters, adds Esler.

“There is some great automation and optimisation technology which will assist financial advisers in matching the best advice strategy recommendations to the client’s demographics as well as their goals and objectives. Padua Recommend technology is leading the industry on this front but there will no doubt be other competitors coming into the market in the next few years,” says Mr Esler.

“Our research team use AI within their primary and secondary research functions but also in automating data collection and analytics,” says Mr Esler, adding that AI avatar video presentation capability for advisers to present advice to clients is being evaluated and tested at this time.