AI no silver bullet for advice process, documentation: Experts

Financial advisers are increasingly looking to artificial intelligence (AI) to improve their processes and documentation, but experts warn they must exercise a degree of caution and ensure that anything it produces complies with regulation.

A whopping 84% of Australian workers currently use AI, but a large percentage of these apps are not commissioned by the organisation, according to Retrac director Travis Carter, who helps advisers with technology solutions.

Carter told the Financial Advice Association Australia (FAAA) Congress on day two that advisers need "to be careful" with how AI is used.

This includes all advice firm employees taking data and feeding it into apps like ChatGPT - particularly the free version.

"You've got to be aware that we don't know where that data is always going," he said.

Carter said that more than 80% of financial advisers use Microsoft 365, which has 24 apps natively built in and AI tool, Copilot, is one of them.

"Copilot has been out for 10 months in Australia for small to medium businesses, and the innovation that has come about in the last 10 months has been phenomenal," he said.

Copilot, for example, can turn a 25-page Statement of Advice (SoA) into a PowerPoint presentation that can be used with the client within minutes.

"But the most important thing to note is not all tools are appropriate for the financial advice industry," Carter added.

Tangelo Advice Consulting director and principal consultant Conrad Travers, who also spoke on the panel, urged advisers to take stock of their processes to improve efficiencies in the practice.

He warned that AI will "not solve all of your problems".

"Process and technology supported by AI used opportunistically can dramatically improve your processes, but don't go chasing rainbows. Focus on the areas that are actually going to deliver value for your business," he said.

AI can be used for the initial engagement process, marketing materials, and setting pre-meeting emails and so forth, but in terms of information gathering, Travers said "there is no way to avoid the fact that your contact with the client is something you can have to do face to face or via video."

Lead ombudsman for investment and advice at the Australian Financial Complaints Authority (AFCA) Shail Singh told delegates that he has not yet come across complaints involving advice documents produced by AI and may not.

Ultimately, there's an AFSL that's responsible for the conduct, he said, noting that it doesn't matter how the adviser gets from A to B, provided that all the key things such as understanding clients' objectives, providing them with the correct advice, informing them - have been ticked off.

"But as a word of caution, yes, there are many benefits of AI and [in terms of] efficiencies, but ultimately, there's a person and an AFSL behind it, so you need to be confident that it is doing the things that you want it to do," Singh said.