The Financial Conduct Authority’s (FCA) planned live artificial intelligence (AI) testing service, will open the door to AI adoption in wealth management and advice, according to Suman Rao, managing director for the UK and Ireland at finance tech firm Avaloq.
The service will part of the FCA’s AI Lab and is set to launch in September after a period of consultation with the industry.
“The FCA’s planned testing service for AI models is a clear sign of the regulator’s commitment to supporting responsible innovation across the financial services industry,” Rao said.
“By offering clarity and a regulated testing service, it will provide a safety net for wealth managers looking to leverage AI to support their business and client needs.
“Our industry research shows that while wealth managers are eager to adopt AI, many are held back by a lack of client trust.”
Rao added that a quarter of professionals believe clients could never trust AI for investment decisions (24%), with a similar proportion saying the same about financial planning (27%).
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“We believe today’s announcement will provide reassurance by offering a platform to help firms test and implement AI responsibly and, in doing so, build greater client confidence,” he said.
It will not change overnight, and there is plenty of work for advisers and wealth managers to do, he noted.
“While the FCA’s initiative will help build trust and give firms the confidence needed to roll out AI initiatives, it is unlikely that investors will ever feel comfortable fully delegating decisions to AI.”
Rao concluded that firms should therefore focus on how AI can support advisers and relationship managers in scaling their personalised service, ensuring the personal touch can be delivered effectively to a larger client base.
