Financial services have always had a penchant for silver bullets. In the 1980s it was deregulation, in the 1990s investment platforms, in the 2000s passive funds. Today’s cure-all is artificial intelligence (AI).
Executives now talk breathlessly about automated suitability reports, efficiency savings and AI driven advice, with the potential to ease the burden on front-line staff. However, a word of caution might be advisable before the industry retools itself as an annex of Silicon Valley.
The FCA’s Consumer Duty requires firms to evidence fair value and good outcomes, not to showcase the glossiest app. The advice boundary remains under review and targeted support and simplified advice are still ideals, not certainties. If firms shift too hard into digital delivery, they risk undermining the very trust the Consumer Duty is supposed to enshrine.
With important decisions, digital convenience and human validation are complements, not substitutes
Even Gen Z, often caricatured as “digital natives”, shows ambivalence. While surveys may reveal younger investors like the ease of mobile apps for research and transactions, they still want human reassurance when making consequential decisions, whether that be buying a home, consolidating pensions, or investing an inheritance.
With those important decisions, digital convenience and human validation are complements, not substitutes.
Large language models can generate plausible nonsense while algorithms can optimise portfolios but not navigate a family dispute over inheritance, or the psychological toll of a downturn. Deploying such systems at scale risks creating false confidence and regulatory exposure.
According to the FCA’s 2024 AI and Machine Learning Survey, 75% of financial services firms are deploying AI, yet only 34% reported having a complete understanding of how those systems operate. This suggests many firms may be deploying complex tools without full comprehension. The risk is if such systems are marketed as “advice engines” when they may lack transparency and robustness.
The Consumer Duty heightens that risk. If digital interactions mislead, exclude vulnerable customers, or fail to deliver promised value, firms will be held accountable. A chatbot that encourages risky trading behaviour or misinterprets vulnerability flags is not a shield; it is a liability.
Advisers should train AI tools gradually ‘like a puppy’
None of this is to dismiss technology outright. Used sensibly, it can improve efficiency and free advisers for higher-value work.
Automating suitability reports, digitising onboarding and enhancing Anti-Money Laundering monitoring presents a clear win. Some firms use behavioural analytics to spot clients logging in obsessively during volatile markets and offer a human check-in at those moments – a case of technology enabling humanity rather than replacing it.
That is the distinction firms must grasp – good practice integrates “tech and touch”. Vanguard’s Personal Advisor Services in the US is a case in point: clients get digital tools and low-cost portfolios, but every account is anchored by access to a human adviser. It has grown to manage over $250bn.
By contrast, standalone robo-advisers that promised disruption have struggled to gain profitability, and many smaller imitators have been acquired or wound down.
There is also branding to consider. Trust in financial services remains fragile, with the FCA scrutinising fees, ongoing services and value for money. Against that backdrop, telling clients their financial wellbeing is overseen by “the machine” is hardly reassuring. Customers want to know there is human accountability behind the glossy interface.
Success is not about dazzling interfaces; it is about helping clients make sound decisions through market cycles
The pragmatic path is hybrid. Allow clients to self-serve for simple tasks, but ensure easy escalation to humans for judgment calls. Train advisers to use AI outputs critically, not slavishly. And embed governance so that every digital nudge or suggestion can be evidenced against Duty requirements.
It is entirely possible that, a decade from now, AI will be capable of handling routine advice safely. But the industry cannot behave as though that moment has already arrived. For now, the edge remains with firms that combine efficiency with empathy.
The temptation to market oneself as a fintech rather than a fiduciary is strong: it flatters investors, garners headlines, signals modernity. But wealth and asset management is a long game. Success is not about dazzling interfaces; it is about helping clients make sound decisions through market cycles and personal upheavals.
Technology can and should play a role. Yet firms that forget the primacy of human interaction may discover that, in trying to close the advice gap, they widen the trust gap instead.
Dominic House is head of frameworks at Simplify Consulting
