AI will ‘augment’ advisers, not replace them

According to Microsoft Australia and New Zealand’s chief technology officer, artificial intelligence still has a long way before it is capable of replacing humans.

Speaking at a Colonial First State AI in advice event in Sydney this week, Rik Irons-Mclean said concerns about AI are misplaced, particularly in the short term.

“I'd actually say the threat is much more likely to you to come from another human that's using AI to get business advantage when you're not using it,” Irons-Mclean explained.

“From a business perspective, you're much more likely to suffer from competitors who are using AI or new start-ups who are using AI for competitive advantage.”

Jeroen Buwalda, group executive, transformation, technology and operations at CFS, shared a similar sentiment, arguing that despite the availability of a wide range of “fancy technology”, clients are overwhelmingly interested in speaking with a human expert.

“They still want to see the proverbial white in the eyes, if only to confirm some of the assumptions that they have,” Buwalda said, adding that advice firms can get the most value through augmenting their offering with AI.

“Humans in an AI environment are either in the loop where we participate in a task, on the loop where we monitor and check a task, or off the loop where AI is doing things autonomously. In financial advice, AI capabilities will augment the adviser well before they will be successfully, directly employed with customers,” he said.

“This will be an evolution rather than a revolution.”

However, Buwalda noted that a considerable portion of advisers that have utilised generative AI have been “really disappointed” in the experience.”

“The first time when you use it, you don't quite get out of it what you want to, and typically, you only have one chance to make a good impression,” he said.

“But in this case, I urge you to try again, because the models will become better every day, every week, every month, and more importantly, you will become better in asking the right questions.”

Also urging advisers to “embrace” AI, Irons-Mclean added that there is still a need to seriously consider areas such as “security, and responsible and ethical AI governance”.

“The governance is probably the most important thing, because as you deploy AI in your business, you want to make sure you have the right guard rails, the right capabilities, procedures and processes in place to make sure it's doing what it should be doing, or you can remediate against that,” he said.

Putting AI into action

Providing a practical example of an advice firm that has deployed AI tools to create efficiencies, Hunter Financial Planning business support team leader Taylor Phillips said the technology has been instrumental in growing the practice’s capacity “without necessarily increasing our human resources”.

“We didn't go looking for AI as a solution initially. It really found us, and that came from the business having big goals,” Phillips said.

“We know that there's a growing need for advice in Australia, and we want to continue serving our clients whilst engaging many more new clients.”

Hunter Financial already had a high support ratio, with its team of 28 including just four advisers. However, this has enabled them to service around 780 clients.

“We believe the future of the industry is really bright, and that is going to be including a lot of technology,” Phillips added.

“So, our business planning kicked off a tech review. Initially, we were just focusing on very common challenges, like improving our cyber security, upgrading our devices for the next generation of technology, and ultimately moving from servers into the cloud.

“Once we got those foundations laid, we then had AI presenting itself as an opportunity for really quick and easy wins to automate our repeatable administration tasks.”

Aiming for “progress, not perfection”, Phillips said the firm has found that, given it sees an average of 140 clients per month, even small wins of “a minute here or a minute there” adds up to a huge amount of time for the team to spend on the most important parts of the advice process.

“We are seeing a lot of compliance boxes ticked through the use of bookings in particular, but just the use of AI generally. Across our processes now, we are able to automatically send compliance documents, provide disclosures and seamlessly integrate these things into our existing processes,” she explained.

“We are also seeing cyber security benefits linked to HR. When it comes to off boarding a staff member, it's usually just the Microsoft account. Now, excellent, but previously that could have been a long list of tech stack. So, that's a that's a huge win for our business.”

Not everything about moving into an AI environment has been smooth sailing, Phillips said, with the largest challenge being the change management for the people in the business.

“The rolling out of the new approach, the process, the adoption of it, and the training attached to it, has been significant. But I think we're over that hurdle now,” she said.

“The impact has been fast; I'll try to summarise it. Firstly, with Teams and Copilot, we have increased our capacity for client appointments by about 23 per cent, so for us that's about 270 more appointments that were completed this financial year to date, with a few months to go, compared to last financial year. It's pretty significant.

“We also launched bookings in January, and we have had the best January and February numbers and activity ever. We've got our advisers and associates spending more time with clients, our managers spending more time with people, and we've got Copilot as our tech team.”