Netwealth’s AdviceTech Report 2023, which surveyed 102 Australian financial advisers on emerging technologies like AI, said there are clear benefits for financial advice businesses.
“Financial advice experts in our survey believe technology will lead to significant leaps in how they do business over the next five years,” the report said.
“And what technology do they think will deliver on this promise? Fifty per cent of advice firms say AI – jumping from 25 per cent the previous year – the largest increase of all advicetechs.”
Despite this strong indication, AI is still not widely adopted across the financial advice industry. The report found that just 11 per cent of advice firms have piloted or are implementing AI in limited use cases, with another third (34 per cent) exploring its potential.
“However, this suggests almost half of all advice firms are ‘AI interested’,” Netwealth said.
“Of the AI-interested advice firms, 65 per cent anticipate increasing their AI spend in the coming year.”
Among these AI-interested firms, the vast majority have high expectations of the benefits of AI over the next five years, with 96 per cent anticipating broad effects on how they manage clients and 78 per cent saying the same about their staff.
Looking specifically at how AI-interested businesses are projecting the technology to impact their business over the next two to five years, 100 per cent forecasted improved efficiencies. Cost savings (74 per cent), improving accuracy (70 per cent), regulatory compliance (57 per cent), and a better ability to deal with fraud and cyber threats (50 per cent) were also high on the list.
A large majority said they wanted to use the technology to improve their client services (89 per cent), service offering (70 per cent), client engagement and education (70 per cent), while many also hope to improve the productivity of their staff. For the most part, this took the form of identifying improvements in productivity (67 per cent) and the creativity of staff (39 per cent), however, 15 per cent saw AI as a way to reduce headcount.
“What is clear from our research is that there is a lot of hope in new technologies including AI to drive more productivity, efficiency, and value in the business and for clients,” Netwealth said.
Many AI-interested advice businesses are either piloting or exploring AI in their firms in areas surrounding the advice process, including marketing (67 per cent), client services (61 per cent), administration (57 per cent), and compliance and security (17 per cent).
However, a large portion are also exploring the use of AI in advice itself (57 per cent), specifically around client reviews (43 per cent) and creating the financial plan or statement of advice (SoA) production (30 per cent).
Twenty-eight per cent said they are exploring AI for portfolio construction and management, including market research (17 per cent), choosing appropriate clients/portfolios (11 per cent) or investment selection (9 per cent).
“It’s important to recognise this wave is not just about machines – but should be a collaboration between humans and machines, where humans provide higher levels of creativity, empathy, teamwork and judgment, resulting in improved business ingenuity,” Netwealth said.
