Are AI and digital tech powerful friends or foes for financial advisers?
Whether it’s ChatGPT, Siri or facial recognition, AI and digital technology are becoming part of our everyday lives whether we like it or not.
The financial services industry is no different. We’ve already seen how automation can help improve the productivity of back-office administration and tasks and now algorithms and advanced calculation engines are helping to push it forward through digital advice.
But does this mean the loss of jobs? Will paraplanners become defunct? Will more financial advice clients choose digital advice over a face-to-face relationship?
The answer to all of these questions is no.
Digital advice—like the portfolio management and CRM systems used daily—is a complementary tool that allows financial advisers to offer their services to more clients. It’s not designed to steal existing ones.
Safe, compliant, secure
There is much debate around the safe use of tech and human rights discussions about if and how it should be regulated. The tech behind any digital advice must be designed to be safe, with in-built guard rails ensuring individual bias is reduced and clients are triaged out where complex advice needs are identified. Inputs should be from multiple, independent advice, compliance and legal professionals. And finally, it must be secure, with exceptional security, data encryption and testing.
Solving for simple financial advice
It is universally agreed that seeking financial advice improves outcomes. Research from the Financial Services Council estimates that those who obtain professional financial advice accumulate at least three times more assets after 15 years than those who make their own decisions.
At the same time, we know 90% of Australians cannot afford financial advice, with the average advice fee reaching $4,250 in 2022*. This is the space that digital advice occupies. moneyGPS, for example, allows advisers to offer digital single-topic SoAs for $90-180. under their own branding but through the moneyGPS AFSL.
*Adviser Ratings 2023
Scale without increasing headcount
The latest QAR report quoted there are only around 16,000 financial advisers in Australia. As independent chair Michelle Levy says, “It is not feasible or sensible to think that Advisers have the capacity to assist most people with their incidental questions or even a financial plan.”
Digital advice solves this problem too. Advice practices implementing a digital advice service are able to scale and serve more clients without increasing the number of people they employ. Hybrid digital advice, like moneyGPS, includes the option for clients to speak to a GPS coach—providing comfort to those who prefer to talk through their SoA with a human.
Future-proofing a practice
While we don’t believe face-to-face advisers will ever be out of work, we do believe that they’ll need to embrace digital advice if they want to stay relevant and meet their clients’ needs.
Managing finances online is seen as flexible and convenient and it is clear that the majority of people are comfortable with it. 76% of 18-44 yr olds currently use banking apps monthly, 76% of 45-54 yr olds bank online, and that number rises to 83% for 55-64 yr olds*.
With the great wealth transfer happening over the next two decades, adding digital advice to their wheelhouse is going to be critically important.
While it’s easy to believe fear-mongering headlines about AI and digital technology taking our jobs, we don’t believe this is going to be the reality for financial advisers. Now more than ever Australians need help with their finances, and they’re going to turn to financial advisers. Finally, we have the technology that makes it possible to provide that help.
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accountantsGPS and moneyGPS SaaS products provide affordable, compliant digital advice and SMSF services, to Australians through; Institutions, Accountants, Financial Advisers, Superfunds and Employers.
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Fiduciary is an Australian Fintech and owner of accountantsGPS and moneyGPS—SaaS products that provide affordable, compliant digital advice and SMSF services, to Australians through; Institutions, Accountants, Financial Advisers, Superfunds and Employers.
Designed by finance industry stalwarts George Haramis and Drew Fenton and created by a team of tech heads, it combines all the brilliant parts of the financial services world in a simplified, user-friendly way.
accountantsGPS integrates with BGL’s API extracting data from BGL’s Simple Fund 360 SMSF administration software to produce a digital SMSF Check-Up report.
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