Financial planning survived the rise of robo-advisers over the past decade, and now faces a far more powerful futuristic challenge: artificial intelligence.
However, the explosion of generative AI such ChatGPT is expected to be helpful rather than harmful in helping Australians grow their wealth, the industry has been told.
Advice costs could fall and advisers should become more efficient, with AI serving as a tool instead of replacing financial planners, the Financial Advice Association Australia congress heard on Tuesday.
AI is already producing lifelike videos of adviser avatars based on written text, and futurist and chairman of Advanced Human Technologies Ross Dawson said AI tools could create a “new dawn in financial advice”.
Mr Dawson said ChatGPT surged to 100 million users in two months – faster than any other technology’s take-up – “because people saw the incredible things it could do”.
“This was something that was not expected … there was no AI researcher who was not surprised by what had happened,” he said
Global AI consultant and educator Laurel Papworth has been working in artificial intelligence for two decades, and told the FAAA conference said she was “as shocked as everybody else when generative AI emerged”.
She said AI could be a co-pilot in providing financial advice but should not be given control of the plane.
Advice Intelligence founder Jacqui Henderson said AI was forecast impact one-third of Australia’s economic activity – about $600bn – but technology would never replace advisers.
“Humans need another human to validate their thinking,” she said.
“That coaching aspect is fundamental.”
The CEO of the global Financial Planning Standards Board, Dante De Gori, said he had visited several countries for conferences this year and found AI was the number one topic worldwide.
He was optimistic about AI’s future, but was cautious about its ability to reduce advice costs while Australia still had a huge supply-demand strain after the number of advisers halved in the past decade.
“I think pricing will continue to be high while demand is high,” said Mr De Gori, a former boss of the Financial Planning Association, which merged this year with the Association of Financial Advisers to become the FAAA.
He saw the role of financial advisers evolving more towards coaching – similar to personal trainers – while AI did the number crunching and other background work.
“Personal trainers exist because humans have a big flaw: discipline and motivation.”
Mr De Gori said he recently heard a US conference questioned about whether AI would replace financial planners.
“The answer was no, but financial planners who use AI will replace those who don’t,” he said.
“If you do nothing, you are going to be replaced.”
AI is not the first technology change that some feared would replace financial planners.
“When I was CEO of the FPA about eight years ago I got a knock on the door from the robo-advisers who were entering the market back then,” Mr De Gori said. “They wanted to introduce themselves and say we have arrived in Australia and you are probably not going to have any members in about 12 months’ time.
“About three or four years later they appeared on my doorstep again, asking how can we work with financial planners, how can we help embed these tools … that to me is the future message with AI.”
In one example of AI’s power, Sydney fintech Padua Solutions is using AI where written advice becomes a hyper-realistic video avatar of the adviser to deliver a personal message.
“If an adviser cannot present to a client for whatever reason, you can actually send them a summary of the advice on video … saving time, providing more advice to more people,” Padua co-CEO Matt Esler said.
The original article by Anthony Keane, The Australian can be viewed here: https://www.theaustralian.com.au/business/wealth/ais-impact-on-financial-advice-will-bring-a-new-dawn-in-wealth/news-story/a73e764cac016cdd71ec756d6c1a3e2c
