Artificial Intelligence (AI) has become a common software being adopted across a wide breadth of industries where processes are enhanced using technology, replacing humans in full or in part.  Increased efficiency, reduction of errors, improved risk environment and enabling humans to focus on more value-add tasks in the business are just some of the key benefits highlighted from tried and tested use cases.  

In wealth, we know that the advice journey is highly regulated, and rightly so.  But this comes at a cost to the advice firm and adviser, who must ensure that they are always compliant.  In this blog, we explore some of the challenges around the advice process and how with the support of this technology it could evolve, reducing some of the extensive administrative overheads that we see today and still give the customer the face-to-face contact we know that they desire.  

The advice journey today 

The advice process has been subjected to additional regulatory scrutiny, with some hefty fines served for those that don’t meet the standards.  In December 2022 the Financial Conduct Authority (FCA) fined Pembrokeshire Mortgage Centre £2.4million for giving unsuitable advice In relation to defined benefit pension scheme transfers (FCA fines advice firm £2.4mn for ‘woeful’ BSPS failings – FTAdviser). There are plenty of examples also of firms having multiple claims against them at Financial Services Compensation Scheme (FSCS) who have declared those firms to have defaulted. (Three firms fail with FSCS over pensions and investment advice – FTAdviser 

Suitability is a key part of the advice process.  Not only does it utilise a large amount of time and effort, but as referred to above, it attracts complaints to the Financial Ombudsman Service (FOS).  Advisers can be criticised for not taking the right steps to ensure the advice was suitable.  They are required to ensure the advice is sufficiently aligned to the customer’s circumstances and that any information given about a product or investment is clear.   

All complaints are investigated, and will use evidence captured around the advice, so there is a responsibility for the advice firm to ensure that the reasons for a recommendation are clearly defined. 

 How can technology help? 

Technology to support the advice process has made some advances, though it does remain a highly manual process, and with integration struggles between adviser back-office systems and some platform providers, more needs to be done.  Reviewing the advice journey with AI enabled assistants working alongside the Advisers, the benefits are:  

  • Increased efficiency – AI ‘Assistants’ can listen in to conversations between the adviser and the client, document notes and track the capture of important information. The AI tool can parse huge amounts of data to find the best product or solution that best fits the clients wants, needs and risk appetite. It can identify products to the adviser to put forward as a recommendation. 
  • Reduction of errors – The ‘Assistant’ can notify the adviser in real time any alerts they should be aware of, missing data, anomalies in the data, red flags or controls that need some specific attention. By learning from previous experiences, and how those red flags are dealt with, the assistant can build up it’s intelligence of the requirements in different advice meetings.
  • Improved risk environment – AI assistants can act as a control in the advice process by comparing against historical advice given to clients in a similar segment with similar objectives. AI can highlight where there could be issues with the recommendations being out forwards enabling investigation and override.

The future 

There is always a place for the adviser, and we don’t expect this type of assistant to have the capability to replace the adviser. But as the market has recently shown with the failure of many robo-advice products people don’t want advisers to be replaced by automation. Tim Sargisson: Robo-advice is doomed to fail | Money Marketing 

Technology used in this way, allows the adviser to spend more time focussed on their client building the relationship and trust, while also speeding up the process and reducing the admin burden during and after meetings.  It helps to reduce the risk in the advice process by enabling checks throughout. 

Advisers, whether independent or networked, who fully take advantage of the technology available to them will reap the benefits of reduced admin overheads, reduction in data inaccuracies/rework and stronger relationships with their clients and reduced risk of mis-selling claims in the future. 

Jayne Brown

Lead Consultant