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Australians seeking financial advice may soon be able to get it from high-powered artificial intelligence “robo-advisers”, with experts expecting the underserved sector to be in the sights of the rapidly expanding AI industry.
Already, algorithms are doing a good job of dispensing basic investment advice, but the holy grail is to deliver holistic advice without human assistance to help plug the financial advice gap.
Robo financial advice is on the cusp of using artificial intelligence to strengthen its bid to supplant human advisersCredit: Shutterstock.com
Financial adviser numbers have been falling and the cost of advice is rising, making face-to-face advice unaffordable for many people who would benefit from quality advice. Technology is seen as part of the solution.
One of the more advanced automated advice offerings available to Australians, moneyGPS, is being used by financial service providers under license from its developer, Fiduciary Financial Group (FFG).
George Haramis, chief executive and co-founder of FFG, says moneyGPS provides “client-led” digital advice that is in the “best interests of the user”, where users have the option of connecting online with a “coach” who can review the advice.
Haramis says the firm has plans to make moneyGPS available to the public, rather than just through third parties, by the end of this year. He says technology has made huge leaps in the past few years.
“[It is at the] point that moneyGPS provides client-led and digitally supported personal advice … that delivers a fully [regulatory] compliant, single topic statement of advice,” he says.
Single topics include those such as salary sacrificing into super, investment allocation, and saving and investment planning.
Meanwhile, online brokerage platform Tiger Brokers has an AI investment assistant called TigerGPT that is undergoing testing that, once completed, will be rolled out to Australian investors.
Users submit investment-related queries on listed companies, markets and stock insights that Tiger Brokers says can be answered in seconds.
Angus Woods, founder of Adviser Ratings, which rates financial advisers, says even though rapid advances in robo-advice are being made, he is not expecting the demise of financial advisers any time soon.
“AI applied to financial advice will be transformative, but humans, psychologically, want interaction with a person,” Woods says.
There are also concerns over privacy and security of the personal information that must be fed into AI systems, Woods says.
He says the likely use of advanced robo-advice will be in “hybrid” models, where much of the extensive fact-finding about the person seeking advice that is required for comprehensive, personal financial advice will be performed by an algorithm. However, a human adviser remains central to the process, Woods says.
A recently completed government review of financial advice to find ways to plug the advice gap recommends reducing regulatory red tape for advisers, including making it easier for nontraditional providers – such as robo-advisers – to give advice.
The Levy review sees an expanded role for superannuation funds by removing obstacles that hinder funds from providing a wider range of advice to their members. It also recommends giving funds the ability to charge members directly from their super accounts for personal financial advice.
Minister for financial services Stephen Jones said at an industry function recently the Albanese government is favourably disposed to super funds playing a bigger role in advice.
He did not go into specifics but said the government would be saying something about the role of super funds and advice in the near future.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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