Licensees urged to enact AI policies for practices
Licensees are being urged to write clear AI policies for their practices as soon as possible as the technology is mooted as the solution to closing the advice gap.
Last week, Insignia stated it is looking to AI as a way for its advisers to see more clients by reducing the manual processes.
“[AI] is absolutely a game-changing technology that we are embracing and we have embraced historically – we’re not new to this game – but will embrace more strongly to help humans do a better job,” chief executive Scott Hartley said.
Speaking with Money Management, Josh Ratnarajah of AI provider Paradino agreed AI is the viable way for licensees to close the advice gap amid slowing adviser numbers.
Asked whether he could envisage AI being used by advisers on a large scale, such as at Insignia, he said its use was inevitable.
“It has to be, the disconnect between supply and demand of the number of advisers versus how many need advice is so out of whack that AI is the only way. We won’t be able to increase adviser numbers quick enough to meet consumer demand and the only viable technology is AI.
“There’s so many costly parts of the advice business that there’s so many opportunities where it can be used.
“I would recommend licensees listen to their advisers and hear what are their pain points, and where do they want to optimise their process. Take that feedback and vet the providers, including those which practices say they are already using, to make sure it is all correct regarding data security and privacy.”
He said advisers have already shared feedback with Paradino that their biggest pain points are around administrative work and handing over requirements between staff during the advice process and ensuring it is complete and correct.
Regarding regulation of AI, he said the government and regulators would take their time to get a strong AI framework in place – meaning the responsibility currently lies with the licensee to have an AI policy for practices.
“It’s up to the licensee to decide on their AI policy. Prior to this AI was a bit of a Wild West and people were using whatever product they liked. The licensees are getting their act together now and building those AI policies. I think we will see a lot written by the end of the year.
“They know that their advisers are using anything and everything, and they don’t want them putting all their client information into ChatGPT.”
However, he stopped short of saying the licensee should mandate the use of a specific AI product by all of its practices in its policy.
“Advisers should be able to shop for different providers so long as they meet certain requirements, they shouldn’t be made to use a certain one, and it should be up to the adviser to pick the one that will fit best with their business.”
Paradino launched its own AI tool three months ago to optimise the financial planning documentation process and has extended that this week with a virtual assistant feature called Athena.
This assistant can help access client information and insights by simply asking a question, and can help prepare the right documentation for the client.
AUTHOR
Laura Dew
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