How artificial intelligence is improving financial planning processes

Artificial intelligence is rapidly becoming a valuable tool in the lives of financial advisors. As many as two out of three professionals globally believe their firms use artificial intelligence or plan to do so in the next 12 months. That's according to research conducted globally by the not-for-profit standard-setting body for financial planning, Financial Planning Standards Board Ltd. (FPSB), and its global network of organisations. The association surveyed over 6,200 financial advisors in 24 countries to investigate the use and impact of artificial intelligence in financial planning. Financial advisors recognise the potential of artificial intelligence to reduce costs and believe it will extend access to disadvantaged communities, paving the way for more affordable financial advice.

The research revealed a strong adoption of artificial intelligence, with financial advisors using it to streamline client data collection, risk profiling and communications. Respondents were generally optimistic about the potential of artificial intelligence to improve the quality of financial planning advice, reduce costs and expand access to financial planning for disadvantaged populations. However, despite the positive outlook, financial advisors also recognise the risks associated with the use of artificial intelligence, citing data privacy and cybersecurity as major risks. "This technology is not only reshaping the practice of financial planning, but it could also open doors for those who have historically lacked access to essential financial services, explains Dante De Gori, CFP, Ceo of FPSB. "We are witnessing a pivotal moment in the financial planning profession, where advisors are adopting artificial intelligence to work smarter, allowing more time for a deeper human connection with clients in difficult conversations that impact financial decision-making to provide clarity and support in staying on track to achieve their life goals."

According to the research, the main impacts of artificial intelligence on financial planning include client services. More than three quarters of financial advisors surveyed (78%) believe artificial intelligence will help them better serve clients, while 60% believe it will improve the quality of financial advice. Artificial intelligence adoption is expanding with two-thirds of firms having or planning to use it in the next 12 months, adoption rates are highest among small and large firms. Fifty per cent of financial advisors have a positive view of artificial intelligence, while only eight per cent rate it negatively.

The impact on costs is also significant: 59% of financial advisors see it as a tool to help reduce the costs of financial planning services and 60% believe it will increase access to financial planning for disadvantaged segments of the population. Almost half of financial planners using artificial intelligence have implemented it to support the delivery of client services such as client communications (41%), client data collection (33%) and client risk profiling (30%). One in three uses artificial intelligence to improve operational efficiency, for example in marketing and promotions (35%) and in the customer onboarding process (34%).

Despite the benefits, financial planners expressed reservations about the use of AI, with 47% citing concerns about data privacy and cybersecurity and 42% worried about the accuracy and reliability of AI results. According to many, the use of artificial intelligence needs professional development: 49% of consultants thought so, with 49% expressing the need for professional development to improve their data analysis and interpretation skills. Over a third (36%) believe that both the public and the financial planning profession will benefit greatly from general AI education and training.