Turo blog

The financial advice sector has everything to gain from AI

November 1, 2017

It is tempting to call anyone resisting the advent of artificial intelligence (AI), and its effect on the workplace and job market, a Luddite.

That, however, would be an inaccurate analogy. Luddites were not afraid of the actual technology but that their craft and artisanal skills would be replaced by machinery that would probably do a worse job while costing the owners less money.

That is why the unrelenting march of AI in today's world is different. AI today is designed to do the exact opposite - alleviating the workforce of mundane activities while freeing people up to spend valuable time on the more profitable tasks that really matter.

Rather than viewing AI as a threat, we should be embracing the opportunities it brings. But the typical human response is to fear the unknown and feel threatened by change - especially this sort of technology-driven change that is sweeping through a number of sectors and industries across the globe. Even Google co-founder Sergey Brin admitted at this year's Davos meeting he did not foresee the AI revolution that has transformed the tech industry.

The benefits AI will bring are echoed by Vivek Wadhwa, one of the US's leading technology entrepreneurs and academics who says: "Humanity can be free of dogma and historical bias; it can do more intelligent decision-making. And instead of doing repetitive data analysis and number crunching, human workers can focus on enhancing their knowledge and being more creative."

Those who imagine AI spells a jobless future might want to consider that, from day one, technology has created value for our society, and humanity has continually adapted to find a way to put people to work. What is clear to everyone, however, is that AI is no longer ‘on the horizon' - the effect of AI is already being felt across a number of sectors.

A report earlier this year highlighted the 11 industries most likely to be impacted by AI as: science, healthcare/hospitals, policing/security, farming, taxi drivers, insurance companies, financial analysis, public transport, construction, banking and manufacturing workers.

Some come as no surprise - for example, the manufacturing sector where it is widely accepted robotics and technology-driven solutions are the more efficient choice. Some are a no-brainer, such as farming where manpower-intensive activities are being replaced by drones and programmable, intuitive machinery freeing overworked farmers to spend time strategising and planning. 

Distribution and logistics are also making significant progress using a blend of AI and manpower. According to Amazon, employment at Amazon fulfilment has increased by more than 100,000 workers during the three years it went from 1,400 robots in its warehouses to 45,000.

./lm Amazon now packs more products into its warehouses, speeding up picking and packing, so it can put more products into rapid fulfilment. This does not include the more than 100,000 small companies that use Amazon's platform to sell and distribute their own goods. Many of these companies would not have distribution without Amazon and the AI gains they have made to serve customers.

It is, however, those sectors that we maybe have not considered before that will potentially benefit the most from the introduction of AI. If we look at the financial sector, for example, there are huge gains to be made in the advice and wealth space from AI and automation.

Many of the processes in advice and wealth are fact-based journeys that can be processed by intelligent algorithms. By automating administration and quotation systems, for example, skilled advisers have their time freed up to do what they do best - advise clients on the best possible outcomes for them using considered knowledge and experience.

Making financial advice accessible and affordable for everyone should be the priority of the advisory sector. AI is helping the sector to do this by freeing up advisers to spend more time with clients in order to provide a richer, better, more cost-effective and human-centric service to larger numbers of people. AI delivers on consistency of outcomes while significantly helping to support risk management and mitigation.

The reaction of the financial advisory sector to AI has certainly evolved over the past few years. After early initial push-back, it is clear wider acceptance of AI is increasing. This is especially true among the banks and financial institutions who are embracing the concept of robo-advice products in order to streamline and potentially expand their product offerings.

Interestingly, the push-back among professionals may not be due to resistance to robo-advice products - instead, according to the Fintech Circle Institute, the answer may lie in their lack of knowledge about fintech overall. The Institute recently found 94% of finance professionals are bluffing about their fintech know-how while 22% are putting off developing their digital skills out of fear it is too late to catch up with existing fintech experts.

In my view, the financial advisory sector has nothing to fear from the introduction of AI and has everything to gain. I do not see AI replacing frontline advisers anytime soon. While it is claimed at least five million jobs will be replaced by ‘Intelligent Machines' by 2020, we will never completely replace human input.

Desires, thoughts and feelings are still - and, I believe, will remain - exclusive to humans/live beings for the foreseeable future. This is especially relevant in the adviser-client relationship where empathy and communication are as important as key facts, figures and data.

‘Money Is Emotive'

Financial Adviser School head Darren Smith has reinforced this view on the integration of AI into the sector in a recent comment, observing: "Humans are complicated and money is emotive. This means financial advisers need to know the proper language and tone to use with clients, how to be a good listener and how to prioritise their workload. It is this that makes face-to-face advice indispensable."

Beyond the workplace, the AI revolution is quickly meeting the needs of humanity and it is these stories that are also helping AI to become the acceptable face of progress. From Zipline, the California start-up that delivers medical supplies by drone in remote locations across Rwanda, to Uber offering on-demand flu-care packs via their Uber app, these developments outline a revolutionary future healthcare system that brings care to the people who need it, wherever they are.

It is difficult to predict whether AI will be embraced for the good of mankind or whether it will replace us. Whichever the outcome, we are speeding towards it an ever increasing pace. We would all like to think we can harness this incredible change to transform to a better society.

Perhaps, in the short term, Sergey Brin's words resonate more than others: "I would hope that, as some of the more mundane tasks are alleviated through technology, people will find more and more creative and meaningful ways to spend their time."

In this article written by Simon Binney, Business Development Director at Wealth Wizards, which also appeared in Professional Adviser.

Written by
Simon Binney

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

Find out more about Turo and how it can automate key parts of the advice process for your clients and advisers.

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