Expect powerful AI-driven advice offerings in next 5 years

Industry experts have shared a snapshot of what an artificial intelligence-enabled advice industry could look like in the coming years.

Speaking on a Stockbrokers and Investment Advisers Association (SIAA) webinar on leveraging generative AI, Praemium’s chief strategy officer, Denis Orrock, said he believes the hybrid advice model is perhaps most apt moving forward.

“I think these technologies will enable the evolution of lower cost advice to progress far more readily than through robo-advice, but I don’t know [the outcome] yet,” he said. 

“Advice firms will look to leverage that hybrid advice model, investment concierge, or whatever you want to call it, as consumers go up the value chain, to when they can potentially expose advisers and a higher advice fee into the mix that matches. 

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“I certainly think the hybrid advice model will progress and probably be a breeding ground for both clients and advisers as they enter the industry.” 

Given compliance with a regulatory framework is an important aspect of Praemium’s operations, Orrock predicts a more conservative approach to the adoption of AI until there’s more guidance.

“But looking at how we present data, how we service customers, utilising chatbots and such that we do today, a deeper support side of the business continues to grow. We’re very keen to see where the regulators will put barriers or a framework,” he said.

According to Andy Rogers, director of stockbroking at CMC Markets APAC and Canada, there’s a lot of potential for AI technology in the investment world.

“From a retail sense, the platforms will become more powerful, more useable, with less clutter,” he agreed.

Certainly, in wading through large amounts of investment data, AI will play a huge role towards easier decision-making, “but it will still be the end client making that final decision,” Rogers added.

Alon Ellis, partner at strategy consulting practice Monitor Deloitte, expects the advice and investment industry to be “very far down the track” of technological adoption in the next five years.

“We’ll be able to have much more advanced retail offerings and we’ll be far down the track in terms of open data and open banking. I can imagine a world where you’ve got a much more seamless interface with your entire wealth portfolio, you can understand what’s in your super, see your different investments and even your spending with various financial firms, including your banking data,” Ellis stated.

A recent Natixis Investment Managers survey of over 30 fund strategists, including economists, analysts and portfolio managers, found an even 50 per cent split between those who believe AI will drive long-term growth and those who see AI as the next bubble.

Almost 70 per cent said AI will accelerate day trading and around 65 per cent said AI will alter traditional market patterns.

The majority (81 per cent) did not believe AI could take their job in the next two to five years. 

Ellis elaborated: “To the point around the value of AI, productivity or not, I think there’s a tremendous opportunity as a broader society to provide advice and more people with financial literacy at the moment. At the moment, it’s out of reach for a lot of people.

“You can imagine lots of rainy day scenarios where different problematic things could happen, but I don’t think that’s the mindset that we need to get into. 

“We do need to put some guardrails in, some regulations in the space would help, but on the whole, these are big problems to be solved and this is a real unlocking for productivity, so in the long term, it could be a significant positive.”