Artificial intelligence is rapidly evolving to become a disruptive reality in the financial planning industry, particularly once a way is found to commoditise and replace the role of the adviser.
According to a 2013 Oxford University report, there was a 58 per cent probability that artificial intelligence would replace financial advisers, which put the sector among the top 10 professions most likely to be affected in the next 10 to 20 years.
“It’s a really interesting statistic and I think that the reality is if you look around at what’s happening with new online advice tools in Australia, [for example], general advice or commoditised advice probably will be replaced by robots in the next five to 10 years,” netwealth managing director Matt Heine told the Association of Financial Advisers national roadshow in Sydney on Wednesday.
“If someone’s looking for an insurance quote, why wouldn’t they do it online?
“So our job as advisers is to continually bring forth what our value is and lift up the level of advice so that it can’t be commoditised by robots.”
Heine used United Kingdom site Future Advisor as an example.
“It takes a portfolio, gives it a range of algorithms and artificial intelligence to then provide ongoing advice around the client’s portfolio,” he said, adding that ANZ had similarly used IBM’s super computer system, Watson Engagement Advisor.
“There are also a lot of self-service advice tools being trialled by all the banks at the moment, again at that commoditised scaled advice level.”
Advisers could leverage technology in order to reinforce their value to clients, although the financial services sector’s adoption of various technology platforms was “incredibly poor”, he said.
“What’s really disappointing is that, according to the Investment Trends Technology Report, only 20 per cent of financial planners are actually using tablet and mobile technology in their business,” he said.
“So here is a huge opportunity for everyone in this room to start looking at how you can [implement] mobile technology into your business to take that leadership position, but more importantly to service your clients the way that they want to be serviced."
He said advisers needed to act urgently and to be “client-obsessed”.
“So put them at the front of everything that you do, be aware of how people want to interact with you, be aware of what your competition is doing and also spend some time on the Internet and have a look at new, interesting business models,” he said.