Technology & AI: What are the biggest risks and rewards for the advisory industry?

AI and other technologies are creating some exciting opportunities for financial advisers, but also posing some new challenges. In this article adviser technology experts Centology give their view on the biggest risks and rewards facing the industry.

More advisers are embracing AI & technology generally

The vast majority of advisers we speak to are embracing AI and technology generally. Most are eager to gain the efficiency, compliance and customer service benefits it can deliver. At this year’s Empowering Advice Through Technology expo (#EATT2025) 90% of those attending said their firm would increase tech spend over the next 12 months. That’s great news for companies that are creating solutions – and for the advisory industry generally because it shows technology, including AI, is being seen as a positive development.

On the downside, 12% of those attending EATT didn’t know when their company last reviewed their cybersecurity processes. This only gives a snapshot of what’s happening across the industry, but it’s still worrying given that the power of AI heightens the threat level from criminals and scammers.

Scam threats

Because IFAs hold so much data on their clients – and because their clients are generally the wealthiest in society – they make a perfect target for criminals. In an age of advanced AI this means it’s essential to maintain a high level of awareness regarding sophisticated scams using fake videos, phone calls and documents that will be increasingly difficult to spot, even for the most tech savvy professionals.

On the plus side, some business startups are fighting back using the same AI technology. By creating authentic looking, fake client profiles, these startups engage with scammers and obtain the details of the bank accounts they use (see https://www.aviel.tech/). This information can then be passed to banks so that these accounts can be shut down. It’s just one way that AI is being used to fight fire with fire – but it shows there’s room for more innovation as the technology develops.

Securely managing and protecting data has always been important, but in the next few years it’s clear that even the most diligent and forward-thinking advisers will have to raise their game.

A new era of compliance challenges

Most advisers understand that AI can help them to stay compliant in an increasingly tough regulatory landscape. But there may still be some that aren’t fully aware of the scale of what is coming down the road. There’s a lot of debate and concern right now about the potential impact of the UK’s Data (Use and Access) Bill which some in the industry say will ‘be like GDPR on steroids’ if it is approved by Parliament. The Bill has been passed by the House of Lords and is now at the committee stage in the House of Commons. If, as expected, it does come into force it will be a landmark piece of legislation because it aims to modernise how data is used and accessed across public and private sectors.

As the Bill progresses through Parliament, organisations would be well-advised to use this time to think about how it might affect their operations, particularly in terms of data protection compliance and ethical data usage.

The Bill has a key role to play in the UK Government’s AI Opportunities Action Plan and has been welcomed by the UK Information Commissioner’s Office (ICO) in this context.

Jobs & careers

AI will also pose a threat to some traditional jobs and careers in the financial sector. Roles that currently involve a lot of manual processing are most at risk from AI because it can do the same tasks in a fraction of the time. It’s well-known that even most diligent professionals will make one error for every 100 keystrokes when inputting data – so automation and the accuracy of data held will be essential for most of the processes that are currently done manually.

On the flip side, new opportunities will be created for highly-qualified, experienced advisers who have the human intelligence and sixth sense know-how to do what AI can’t do. IFAs will be spending less time doing admin, and more analysing data. The relative value of IFAs, data analysts and fintech engineers is likely to increase. Paraplanners will need to utilise their data skills to get the most out of the technology (e.g. by ensuring that any admin teams are up-skilling, and moving away from manual entry and manual reviews). All of this is worth noting for anyone entering the industry right now, or those currently in at risk roles who are looking for a move to future proof their career.

Summing up

While the advisory industry understands that AI is a game-changing technology which obviously poses threats, overall there is enthusiasm for exploring the many advantages it offers. However, it’s important to note that AI can only deliver advantages if it is underpinned by accurate, clean, datasets. No matter how technology develops, the old adage of ‘garbage in, garbage out’ still applies. This is why companies such as Centology are building intuitive solutions which conform to the highest ISO standards, maximise efficiency and security, and – most importantly – utilise one true source of data. This approach provides firm foundations for AI tools to be layered into the solution to supercharge the results for advisers using the system. For everyone currently working in the advisory sector and supporting industries, AI will drive the biggest transformation they have ever seen. A daunting prospect on the one hand, but on the other the team at Centology feel that we can face the future with confidence. Why? Because we’re among the innovators in our industry who are already stepping up to the plate by identifying opportunities created by AI, creating solutions, and mitigating risks. AI may be one of the biggest challenges our industry has ever faced – but it also creates the most exciting possibilities.