More than half of advisers (55%) have increased the amount they spend on AI and other technology over the past year, according to research by FE Fundinfo.
Of the advisers questioned as part of FE Fundinfo’s 2024 Financial Adviser Survey, 40% said they aim to increase their tech expenditure further over the next 12 months, while 56% intend to maintain their current level of expenditure.
FE Fundinfo said operational efficiency is a key priority for advisers. Most pointed to technologies such as automation and AI as key in this effort, with 52% describing the integration of different software in their financial planning process as “extremely important”.
Financial advisers cited the top use cases for technology in each area of their work as forecasting software for cashflow (92%), attitude to risk questionnaires for profiling (92%), investment selection and analysis tools for doing research (79%), back office record keeping for compliance (75%), and digital anti-money laundering & ID checks as the most important thing in client engagement (69%).
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The primary applications of AI among advisers are enhancing internal processes and streamlining operations, rather than direct client service.
FE Fundinfo also found many financial advisers are still waiting to feel the full benefits of AI, with 90% reporting less than four hours a week in time savings from using it.
In a note of caution, the researchers found signs that the Covid era ‘mass investment in technology’ has put a limit on how much firms can invest now. In last year’s survey, the percentage of respondents who had increased investment in the previous 12 months and planned to grow investment in the next 12 months were both higher than this year’s report, at 72% and 50% respectively.
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Stephen Ford, head of UK distribution at FE Fundinfo, said: “The challenge is greater than ever for financial advisers to prove their value to clients. Our research makes clear that the profession is prioritising continuous innovation to modernise and optimise their operations.
“Of particular note is the popularity of cashflow modellers, pointing to the shift in industry strategy from investment planning to financial planning,” he continued. “Consumer Duty is a clear driver of this trend, with cashflow helping advisers make the ‘informed decisions over their options’ that sit at the heart of this regulation.
“There is cautious optimism among financial advisers towards AI adoption. Although the research indicates growth in applications of AI, scepticism remains about its use in drafting technical materials, promotional documents and compliance tasks. The era of ‘robo-adviser’ is clearly a long way off.”
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