Although many in the financial services sector fear that artificial intelligence (AI) may end up replacing human financial advisors, in reality, advisors will be able to leverage AI to serve their clients better, according to two experts in the emerging technology who spoke at the Financial Planning Standard’s Council (FPSC)’s annual CFP Professional Symposium in Toronto on Wednesday.
There’s a current sense of anxiety over what AI means for “our work, our industries, and our day-to-day lives,” said Ajay Agrawal, the Peter Monk professor of entrepreneurship at the University of Toronto’s Rotman School of Management and founder of the university’s Creative Destruction Lab, during the keynote speech, which focused on the future of AI.
However, Agrawal pointed out that “[AI] has become what economists call a general purpose technology. It’s like electricity. It’s in almost everything.”
Agrawal defined AI as a “fancy prediction machine that uses information you have to generate information you don’t have.” As a result, further growth in AI will lead to a decline in the cost the investment industry spends on making predictions.
What AI can’t do, however, is provide judgment, Agrawal said: “That’s going to become an increasingly important point as the prediction parts of our jobs start getting handed over to machines. Setting the financial goals of a client — that’s judgement. [Determining] what approach to take to reach that goal? The prediction machine can probably do better than [humans] can.”
In a separate session at the symposium, Nikolas Badminton, futurist speaker, author and researcher likened AI as “having a Harvard graduate on your team with 800 years of experience that looks at the impact of every financial event around the world every single day, knows every client’s anniversary and sources all information and how it applies to your book — instantly.”
Badminton believes that advisors and AI will work together to dictate how people should invest. Although AI can rapidly provide a wide breadth of information, it’s unlikely to ever be able to replicate certain decision-making and soft skills that advisors have.
“It’s really hard to encode empathy, humour, creativity, and problem solving,” Badminton said. “Computers are not going to call you up on your birthday and have a quick 15-minute chat just to see if you’re OK.”
A hybrid advice model, Badminton said, would have advisors making judgement calls for a client based on information obtained from AI and big data.
This kind of model would help advisors increase their capacity, attract and retain clients and enhance their digital capabilities, he said.
“Your job will be very different,” Badminton said, “but you will feel incredibly empowered.”
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