How AI Can Close the Financial Advice Gap: Insights from AIFA24

The advice gap continues to widen with fewer people paying for and benefiting from financial advice, research by The Lang Cat has revealed.

A study by the research consultancy found that fewer than 10% of people now pay for financial advice, down from 11% in 2023. In order to reverse this trend, many industry experts are looking at how AI could help.

This issue was a key topic of debate at the inaugural Artificial Intelligence in Financial Advice (#AIFA24) conference which took place in London recently. It included an expo featuring demonstrations of technologies for professionals in the financial advice and wealth management industries. Overall, the event was designed to help advice firms understand how AI technology can deliver enhancements and efficiencies to their businesses. The conference attracted IFAs and representatives from leading wealth management firms, and a high percentage of tech providers.

Centology’s Head of Sales, Richard Knights, was there too – read on for his view on the key talking points and takeways:

International tech providers

It was interesting to see the number of international providers at the conference from tech businesses in the USA, Canada and Germany – plus Australian firms looking to enter the UK market. This growing international dimension brings more opportunities to improve the advice journey, but it also adds complexity due to the need to ensure that tech is compatible with UK FCA regulations. 

AI: Challenges & opportunities

Bearing in mind that there is a huge potential financial advice market where as many as 90% of individuals are not currently served, there is enough business for everyone in the industry. The challenge of meeting the demands of this market is so great that technology must play a

bigger role in the future. This is particularly important in the context of engaging with younger, tech-savvy audiences who require financial advice – a key factor for future industry growth.

Having said that, as with all discussions about AI in all sectors, one strand of the AIFA24 debate inevitably focused on concerns about the potential threat it could pose to jobs. Of course, this is an understandable concern – but looking at the bigger picture I think there are more reasons to be positive about AI and to be excited about the potential it has to deliver innovative solutions.

Advice Format

AIFA24 also gave an indication of how the format of advice will change in the future, partly to engage younger audiences. There is still a desire for face-to-face advice, especially from the very high net worth clients and also older clients, but looking ahead more advice will be given via remote meetings and interaction with apps and tech solutions. Advisers will also need to adapt their skills to understand client behaviours because certain scenarios could dramatically alter their goals and appetite for risk.

The problem of ‘plug-in’ tech

Fragmentation of the financial advice industry’s tech offering – and how this affects the ability to service clients effectively – was a major topic of debate. It’s clear that incumbent CRM systems still need a plethora of plug-in features to be able to offer a complete service. However, this growing use of plug-in tech creates a more disjointed environment for clients and advisers, and increases the chances of data errors. This is why Centology has developed a solution which offers a fully functional and vertical environment for clients, advisers and DFMs to be able to communicate, advise and trade. The debate at AIFA24 was therefore really useful for us because it was another reminder about the need to provide an effective, seamless solution, so in this context the conference will give us even more motivation as we continue our development work. Knowing that up to 90% of individuals who need professional financial advice may not currently have access to it highlights the scale of the market that is currently not being served.

Cybersecurity

This was an area highlighted in the plenary sessions. Clearly concerning is the fact that as much as AI can help us to be more efficient and provide a better service, it can also be

misused by criminals to improve their ability to attack systems and install ransomware. Checking your tech is as secure as possible becomes ever more important, and ensuring everyone in your company understands their responsibility in this regard is vital. At Centology we understand how difficult this can be and it is why we maintain our ISO 27001 accreditation, but also raise the bar even higher by holding monthly cybersecurity training sessions for all staff.

If this blog has given you some food for thought and you want to find out more about how Centology could help your business, visit us at www.centology.io today.

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