Will AI help local financial planners?
It seems like most local financial planners think so. According to research by The Openwork Partnership over 50% of advisers think that AI (Artificial Intelligence) will benefit their jobs and the way they work.
But 90% say that AI is likely to impact on their relationship with clients and nearly two thirds think that some clients may turn to AI for financial planning solutions.
This is already happening. A recent YouGov survey found that 30% of people were prepared to take advice on their pension options from AI. Over 40% would trust AI to provide an explanation of their pensions jargon free. But 50% were still worried that they might be given the wrong information.
There is already a report of one client using Chat GPT to review their advised portfolio and being recommended to move to a better advisor.
But one area most are agreed on is that AI will be able to help with the back-office paperwork and report writing tasks. Currently an adviser’s time is split with 20% of time spent with clients and 80% on administration. If the administration can be cut, then advisor will have more time to spend with clients and be able to see more clients. With 15 million unadvised investors in the UK more access to advisors can only be a good thing.
The Financial Conduct Authority (FCA) has concerns about AI and has just published a 150-page report on the subject. They believe that AI will become a defining force in financial services but recognise that there will be challenges. The most important will be how to protect consumers from making bad decisions based on AI which might not be right for their personal circumstances. After all, one size does not fit all. If the FCA can’t provide protection, then people may not trust AI.
Will AI help with complex Inheritance Tax (IHT) rules?
But most advisors, however, think that AI won’t be able to deal with more complicated advice solutions. Inheritance Tax and probate for example. After all the average IHT bill is now over £230,000. Up nearly 10% on last year.
Complexity in IHT rules are already causing a problem for executors. HMRC has reported a 35% increase in fines for late IHT returns. Not surprising perhaps since the current simple IHT return has over 120 questions which need detailed financial history to complete. Often needing further detailed schedules.
This is where we are able to provide a real advantage for our clients families, because we’ve already provided the IHT advice and hold all the details of the historic financial transactions. We can’t envisage a situation where AI would be able to take on such a complex task requiring prior knowledge which may not be available.
With a record 5% of estates now having to pay IHT (2023/24) – that’s one in twenty – help with IHT from local financial planners has never been more important.
AI and fraud is a problem.
One negative spin off from AI is the rapid rise in AI driven fraud. AI is becoming very adept at impersonation fraud. Sending messages by e mail, SMS and even voice messages which are increasingly convincing. Security analysts are strongly recommending two stage verification at every touch point with either your bank or financial planners.
The basis message is trust no one any more. That’s a sad state of affairs but one which we will all have to get used to. One way be confident about your interaction with a financial planner is by meeting face to face. AI has no way to invade that personal relationship to access your financial details.
95% of all dealings we have with our clients are face to face. Almost everyone is happy to come into the Barrowford Office and see their financial planners. For a while that seemed like a bit of an old-fashioned approach, but now it’s back in fashion as one of the safest ways to transact business. We look forward to seeing you and of course you can bring your pets.
Our experience seems to be backed up by others experiences as well. Research by Fundment found that 50% of people wanted to be advised by a real person, maybe with some element of AI helping. Only 16% wanted to be advised by an AI only solution.
Age and technology is also a problem
Advisers are becomingly increasingly frustrated by the way companies deal with customers, especially older customers over 70. The switch to App based solutions is a particular problem with many older people struggling with technology. AI based chat bots can cause the same problems.
Then there is the continuing rise of foreign based call centres where language barriers cause issues for older people.
All of these solutions are designed to reduce costs to the product provider, but seem to pay little regard to requirements to look after vulnerable customers and the fair treatment of customers under the Consumer Duty.
Get more information.
For talk to one of our local financial planners, why not contact Christina today. We offer a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
Or if you’d prefer to think about it some more, why not have a look at our Facebook page, our Vouched For page, or our Testimonials page to see what our customers think about us.
