Financial advice, AI and the human touch

ABOUT a decade ago, the financial services world was abuzz with the concept of robo-advice — financial advice provided by a “bot” on an online platform.

- MARTIN HESSE

Basically, you could punch in details such as your income, savings, expected retirement date, and risk profile, and the bot would do the calculations, select a handful of appropriate investment products, and present you with a rudimentary financial plan.

Robo-advice was not designed for higher earners with more complex financial affairs; it was just your regular middle-class worker whose finances were relatively straightforward and who needed a basic investment plan at low cost. In other words, the mass market.

At the time, it was thought that robo-advice would dramatically change the financial advice landscape and that many advisers would end up out of a job.

That’s not how things worked out. There is a trend among younger generations to “do it yourself” when it comes to investing, and they are investing directly on trading platforms and bypassing any type of adviser, human or otherwise. But for people who want advice, the advisory community remains robust.

Although advisers are relying increasingly on technology and artificial intelligence, the human element has not declined. If anything, it has come to the fore. That’s because technology has actually driven a welcome change in the adviser’s role: from mainly a financial-product-recommendation person to mainly a people person.

AI in financial advice