The value of financial advice has long been rooted in the human connection and trust that is built between an adviser and their client.
The question is: how is this emotional value fairing in the age of artificial intelligence?
The emotional side of financial advice accounts for around 40 per cent of the perceived value for clients, according to Vanguard. This should not be too surprising.
After all, it is the personal relationship that gives clients confidence in their financial position, helps them avoid performance chasing or panic selling, and ensures sensitivity around difficult areas such as estate planning and bereavement.
But the financial landscape is changing fast. Over a third of finance leaders admit they use AI on a daily basis for both personal and professional needs.
It is changing how they think about the management and delivery of their services, from fraud detection and customer relations through to risk and wealth management.
For financial advisers AI has become an increasingly popular tool, although it’s not a sign of the sector's future obsolescence, despite what some may say.
Yes, it has been argued that advice from an AI won’t cost as much as a human adviser or that it will mean advice is available around the clock, rather than just during working hours.
But the fact is that whilst AI might suggest optimal tax strategies, only a human adviser can navigate the nuanced sentiments we all have when it comes to our money.
Such doom-and-gloom thinking also forgets the importance of things like regulatory trust.
As financial advisers operate under the regulations set by the Financial Conduct Authority, clients know they will act with their best interests at heart.
This level of accountability is something AI cannot offer on its own. Moreover, it is a regulatory framework that requires emotional intelligence to navigate, as well as the ability to digest and respond to new information.
Given that so much of the value of advice is in the necessary rapport and trust at its core, it becomes clear that the uncanny valley is a long way from undermining the client-adviser relationship.
AI for growth
In fact, when used well, AI can bolster the quality of an adviser’s practice and help the sector grow.
The clearest route to growth is simply a matter of efficiencies. Advisers can leverage AI to streamline administrative tasks like data processing, onboarding and maintaining client records, or even compliance monitoring.
Simple things that are time-consuming can become the work of an AI, ensuring more time for advisers to engage in meaningful client interactions and to focus on delivering tailored advice that aligns with both the short and long-term goals of clients.
AI can also support greater personalisation and insight when it comes to a client’s financial situation.
