In recent months, you’ll likely have seen news headlines about the explosion in the use of artificial intelligence, or AI.
You may even have been tempted to try two of the newest services – ChatGPT or Google’s Bard – to find recipes, write social media updates, or devise an exercise plan.
While AI can be a fantastic resource to save time or provide valuable information, it also has its critics. Indeed, the so-called “godfather of AI”, Dr Geoffrey Hinton, recently quit his post at Google citing the “existential risk” posed by the creation of a true digital intelligence.
As AI becomes more intuitive, many have asked if it could replace humans in a range of jobs. The latest ChatGPT is reported to be smart enough to pass the bar exam for trainee lawyers – so could it provide legal advice in future?
One of the concerns many professionals have is that, while AI may be improving all the time, it can’t provide the bespoke, personal advice that clients need – and this is particularly true when it comes to financial planning. Here’s why your clients need to speak to an expert for advice, not AI.
AI can be wildly inaccurate
One of the key concerns with AI is that it provides information that a reader might accept as fact.
We recently asked ChatGPT to write a summary of the pension changes in the 2023 spring Budget. To say that it was inaccurate would be something of an understatement.
Not only did it get many of the figures totally wrong, but it also failed to mention important developments such as the proposed abolition of the pension Lifetime Allowance.
A concern would be that any of your clients reading an AI response would believe it to be factually correct, when the reality was that it can be anything but.
AI cannot provide bespoke, tailored advice
Secondly, there are strict rules about who, or what, can provide financial advice. As a Chartered firm, our planners have been through rigorous training and assessment – just like any other professional – before we are able to provide advice.
To give tailored recommendations to your clients, we must be regulated. It means that firms or services offering more generic help or AI are going to, at best, provide what is deemed to be guidance, rather than advice.
For example, when we asked ChatGPT “how much should I save for retirement”, the response actually suggested we consult a financial adviser! It said:
“Determining how much to save for retirement can depend on a variety of factors, such as your current age, income, lifestyle, and retirement goals. A general rule of thumb is to save at least 10-15% of your income each year towards retirement, starting as early as possible.
“You may also want to consider using a retirement calculator or consulting with a financial adviser to create a more personalised savings plan.”
AI doesn’t know anything about your clients’ personal circumstances, their life goals and ambitions, their attitude to risk, or the financial arrangements they already have in place. Consequently, the advice is likely to be extremely broad and no way tailored to your client’s current and future needs.
Financial advice sector likely to embrace AI, not be replaced by it
If you’ve ever asked AI to answer a question, to give you a recipe, to create an exercise plan or similar, you’ll know that the responses can be genuinely useful.
So, there’s no reason that, with the correct input, an AI chatbot wouldn’t be able to create a reasonably detailed financial plan for a client.
What is likely to happen over the coming years is that financial planners begin to embrace the benefits of AI and what it can do, rather than considering it an existential threat to their livelihood.
We asked ChatGPT “what impact will AI have on financial advisers?” It said:
“AI is already having an impact on financial advisers, and this impact is likely to increase in the coming years.
“AI can automate many tasks that were previously performed by human financial advisers, such as analysing data, monitoring investments, and creating financial plans. This can free up time for financial advisers to focus on building relationships with clients and providing personalised advice.”
So, if your clients are seeking bespoke advice tailored to their circumstances and goals, a financial planner is still likely to be the best outcome.
Get in touch
If you have clients who would benefit from Chartered advice, or you’d like to explore how you can work more closely with us, please get in touch. Email firstname.lastname@example.org or call us on 0118 987 6655.