The financial advisory industry is facing a new challenge with the rise of artificial intelligence (AI) but experts believe AI will ultimately be a force for good, helping Australians grow their wealth.
AI is already being used to create lifelike videos of advisor avatars based on written text, and its tools could usher in a "new dawn in financial advice", according to futurist and Advanced Human Technologies chairman Ross Dawson.
He was speaking at the Financial Advice Association Australia congress on Tuesday.
AI as coach
Advice Intelligence founder Jacqui Henderson said AI was forecast to impact one-third of Australia's economic activity, estimated at about $600 billion, but technology would never replace advisers.
“Humans need another human to validate their thinking,” she said.
“That coaching aspect is fundamental.”
Financial Planning Standards Board chief executive officer Dante De Gori said the role of financial advisers would evolve more towards coaching, while AI did the number crunching and other background work.
"Personal trainers exist because humans have a big flaw: discipline and motivation," he said.
De Gori said the future of financial advice was not about AI replacing financial planners, but about financial planners who use AI replacing those who don't.
"If you do nothing, you are going to be replaced," he said.
While De Gori was optimistic about AI’s future, he was cautious about its ability to reduce advice costs after the number of advisers in Australia halved in the past decade, saying, “I think pricing will continue to be high while demand is high”.
Time-saving, far-reaching
In one example of AI's power, Sydney fintech Padua Solutions is using AI to create hyper-realistic video avatars of advisers to deliver personal messages.
“If an adviser cannot present to a client for whatever reason, you can actually send them a summary of the advice on video … saving time, providing more advice to more people,” Padua co-chief executive officer Matt Esler said.
Gen Z cool with A1 advice
In an October study by Charles Schwab (NYSE:SCHW), the money management firm found that 75% of Gen Z respondents were comfortable asking AI tools for help with financial planning.
Additionally, they were optimistic that they would retire sooner than their elder generational counterparts, at an average age of 61.
Regardless of age, the Charles Schwab study also reported that everyone was more confident accepting advice from a human than a computer.