I saw a statistic that gave me slight cause for concern this week. In the last 12 months, 56% of British adults have used AI for a money-related question.
Fifty six per cent of adults! That feels like a lot of people. Granted, the nuance isn’t there to decipher what they asked about, and I would imagine that it’s very wide ranging – from cash to savings accounts, to mortgages, to tax, to investments.
So, this small single stat is not quite the canary in the coalmine for the end of our profession.
However, the underlying premise that people are using AI for questioning gave me pause. It’s fair to say I knew it was happening (as do most people) as I’ve been doing it myself for a whole host of reasons. It’s generally a really helpful tool. But I guess the sheer volume of people is what made me sit up and take notice.
I was then speaking with a client whose mother has passed away, and he was asking about trust planning for assets held by his father. He sent me what ChatGPT had told him. The AI provided the options of a Life Interest Trust and/or a standard Discretionary Trust. I think these are reasonably good answers from the machine. No issue there.
The AI was directionally right. However, there were so many elements of the conversation it missed
Also, there is no issue with him gleaning knowledge to make sure he is informed before he has further discussions with his family. I actively encourage this. It just feels like the start of a change in the way people know about our profession – which, let’s be honest, has been a little opaque in years gone by.
The AI was directionally right. However, there were so many elements of the conversation it missed, meaning I’m still needed for this particular client. I guess he couldn’t ask the AI exactly the right questions to provide him with a detailed enough answer, and this is where we come in.
I’ll provide some examples. The client asked about gifting property into the Life Interest Trust. The AI didn’t explain potential capital gains tax exemptions, possible stamp duty implications, how the property could still be in the estate of his father as he’s retaining benefits of income from the property etc. These are just a few of the issues/challenges and opportunities for us.
I tried to think of knowledge workers who have been disrupted and some that haven’t. Rightmove hasn’t stopped estate agents from working over the last 20 years of the internet. However, AI is starting to build basic web developers and people in this sector in the US are being let go from their highly paid jobs.
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Just recently, a number of the ‘Magnificent 7’ signalled tens of thousands of job cuts. This isn’t theory; the world is moving and imagining there is no way our profession changes is mad!
People will still need advisers for advice. They’ll need us for implementation and they’ll need us for coaching them through ups and downs and critical thinking. In the longer term, though, there will be more competition and more options for the consumer.
To my mind, this is a good outcome. More choice, potentially lower cost and freely available information. What could go wrong?
I know myself, and from experience with clients, not to underestimate how hard money is for lots of people. Whether it’s managing it, investing it, gifting it, spending it… all of these involve decisions that people find difficult to make.
Also, amazing businesses can be built on the back of 50-100 clients, which means that financial advisers are here for the long term. But I would highlight the old boy scouts motto of ‘Be Prepared’. Times are a-changing.
Sam Sloma is managing director of Engage Financial Services
