November 27, 2018

The AI advice disruption has begun

Simon is Business Development Director at Wealth Wizards, with 20 years' experience driving the development of automated financial advice.

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The future is there to be designed, writes Simon Binney, and in doing so the advice sector has nothing to fear from machine learning and artificial intelligence - and everything to gain

There is one thing the advisory sector can surely agree on - the future is going to look very different as a result of digital disruption. Traditional models will implode as new technologies shape an industry with customisation and personalisation at its heart.

It is not just about adopting or using machine learning or artificial intelligence (AI) for the sake of it - or because the closest competitor has invested in a technology-driven solution. The key is to shift our collective mindset to a new kind of customer experience that is frictionless, solves problems, delivers solutions and adds real value to their lives.

The future is there to be designed and rather than resisting technology's relentless march forward, we need to embrace and mould it to create what could be countless new models of how financial advice is delivered. And at a time when the advice sector is under growing pressures - from pension freedoms, swathes of baby boomers set to retire and fewer financial advisers available to advise - it is clear something has to change.

Automation and AI provide the natural solution. There is no mystery surrounding AI - it is simply a broad set of algorithms that can solve a specific set of problems. Data is its lifeblood and the more data points, then the faster the algorithms can learn and fine tune predictions. When applied correctly, it is a more effective way of dealing with those tasks that humans do not want to, or do not need to do.

A Sage's VP of bots and artificial intelligence Kriti Sharma told the Telegraph earlier this year: "Businesses in the UK spend on average 120 days a year on administration. This has a huge impact on productivity. AI can shoulder the burden of back-office administration tasks such as logging expenses and crunching data, freeing up people to focus on what matters. Trillions of pounds will be saved annually."

This should be music to the ears of thousands of financial advisers who wade through hours of paperwork and admin tasks. AI has the potential to go further, however, and create real value for advice firms and advisers. Currently the advice sector is experimenting with automated advice to take the repetitive nature out of jobs. But the future is a scenario where AI augments the human adviser by providing intelligence and insight to complement human thinking.

Technology will work hand-in-hand with the adviser of the future allowing them to handle a much larger number of cases, spend more time on engagement, new business and organic growth while improving their skill-set and driving a deeper, longer-lasting customer relationship where advice is delivered in minutes, not days or weeks.

This is just the start. As AI develops, it will take the user experience to the next level. We can expect personal financial management tools where the financial planning AI - with unrestricted access to all financial data - considers a client's entire personal financial situation: how they manage their money, their savings and spending habits, their behaviours to consider alternate ‘what if' scenarios in real time and recommend changes for improving their financial wellness.

The interaction between human adviser and customer will be much softer while also being more accurate and far faster. The customer will spend most of their time talking about their dreams and goals, their needs, their wants, their fears, while the ‘hard facts' will be collected by an AI-powered robo-paraplanner authorised by the customer to collect all of the pertinent details from a data aggregator.

To reach this point, however, requires insightful data in order to train models. Using historical information depends on legacy data that could exhibit bias. We need to be looking to larger data sources combined with the latest in biometrics, augmented reality, the internet of things and artificial intelligence to deliver a brand-new financial user experience.

While this might seem far too ‘science fiction' for some, the transition of the financial industry to an ‘open banking' system is possibly one of the most revolutionary developments to affect the financial sector for decades.

It will make access to valuable and essential data a reality. Combine this with biometrics - which will consign PINs, passwords and security questions to the bin - and voice interfaces such as Alexa, Siri, Cortana, which will deliver an increasingly personalised customer experience, and financial management suddenly takes on a different dimension.

The robo-advice sector is already pushing the boundaries - for example, at the Wealth Wizards AI Guild, we are currently working on the next generation of advice powered by Turo, our new AI capability that provides access to faster cutting-edge roboadvice for the entirety of the advisory sector. Turo's current power lies in its ability efficiently to review an organisation's or adviser's style of advice and then replicate this approach.

The new technology rapidly checks safe and compliant advice is being delivered by traditional advisers, enabling anomalies and outliers to be identified and highlighted for further investigation. In real terms, this means 100% of cases are checked for consistency and appropriateness, while delivering a scalable advice solution. The result is an AI robo-adviser that is bespoke to the firm with low set-up costs. The Wealth Wizards AI Guild is now exploring the next generation of Turo's state-of-the art features such as voice, chat, emotive bots and computer vision capabilities.

Disruption has started

While the value of a human adviser is priceless, disruption to the traditional financial advice model has started in earnest. The digital consumer platforms such as Facebook, Google and WeChat are already dipping their toes into the financial advice sector. They have a strong advantage in that they have a captive audience that trusts them. Buoyed by enormous budgets, it will not take much for them to shift their focus towards regulated financial advice.

The advice sector has nothing to fear from machine learning and artificial intelligence and everything to gain. We are entering an exciting time when traditional business plans, strategies, skill-sets, hiring of future employees and fundamental business practices are turned on their heads.

The future is all about creating a new way of delivering financial advice that is more efficient for the firm and, more importantly, prioritises and enhances the customer experience. Approaching this with a mindset of excitement, discovery and inquisitiveness will shape the successful advice firms of the future.

This article originally appeared in Professional Adviser.

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