Are financial advisers ‘at risk’ from AI disruption?

Financial advisers may be at “high risk from AI disruption”, but industry commentators say such technologies will enhance the role of an adviser, rather than replace them.

In a recent market insight, MLC Asset Management chief investment officer, Dan Farmer, assessed the wide-ranging effects of AI on different sectors and asset classes.

“One study suggests that in the United States, 60 per cent of occupations and 80 per cent of workers will be impacted by AI by 2040. Moreover, rather than blue collar and physical work being most affected, it’s those engaged in knowledge work that are more vulnerable.”

A study from TD Global Investment Solutions listed 15 jobs that it believes are at high risk of AI replacement, with “knowledge workers” most affected, including financial advisers, HR specialists, lawyers and translators.

On the other hand, blue-collar physical jobs such as carpenters and electricians are classified as low risk.

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Farmer continued: “A takeaway from all this is that the best jobs to have will likely to be those that complement AI, while prospects for jobs that can be replaced, which are mainly cognitive-based ones, are dimmer.”

However, commentators believe there is a role for AI and that it can enhance the role of the advisers as they utilise it in their day-to-day life.

Research from Adviser Ratings last month found 47 per cent of advice practices are adopting AI for client engagement, such as newsletter production. This was followed by marketing at 43 per cent, statement of advice or record of advice production at 41 per cent, and portfolio management at 12 per cent.

An Insignia Financial spokesperson – which owns MLC Asset Management – affirmed human advisers will always remain necessary in providing quality advice services.

“While AI may change how jobs or particular roles are performed, there will always be a need for a real adviser to be part of the process of obtaining financial advice. Connecting clients with a phone or face-to-face adviser as part of the digital advice process, is an example of how AI may be a good support tool,” the spokesperson said.

Speaking at the Stockbrokers and Investment Advisers Association (SIAA) annual conference on 14 May, David Rosen, head of wealth management investment platforms at Morgan Stanley US, explained how its advisers are already utilising AI through its new Debrief tool.

In March 2023, Morgan Stanley Wealth Management first announced its partnership with OpenAI towards developing a bespoke internal service that would leverage its technology.

“It essentially allows an adviser when they’re in a conversation with their client to have OpenAI listen to that conversation. When they get back to their desk, in their CRM they will have a summary of that client discussion, a draft email written as well as a list of all the follow-ups that were discussed,” Rosen said.

The efficiencies gained from the technology will be critical by saving advisers a significant amount of time, he added, ultimately enhancing their overall capacity.

“There is clearly a significant amount of opportunities to deliver efficiencies [from technology] for advisers, but we don’t see this replacing a human being at all.”

Also speaking at the conference, Betashares chief executive Alex Vynokur said: “[These tools] will hopefully make advisers enjoy their job more, as they can spend more time with clients and effectively less time on things they would rather not be doing, by letting technology and automation do the heavy lifting.”