AI has the potential to be a game changer for financial advice.
Used well, it can streamline data collection and analysis, help draft advice documents, support regular client reviews and identify when changes in a client’s circumstances may warrant another conversation.
At Strategi, we’re strongly supportive of its use. We generally see AI working best as a tool to support advisers and FAPs rather than replace the adviser-client relationship.
“Financial advice is a relationship business,” says Strategi founder and director, David Greenslade. “Used well, AI should enable advisers and support staff to spend less time on administration and more time talking with clients, uncovering their needs, issues and concerns.”
But as AI use grows, we’re also seeing some recurring problems through our compliance work.
Where are things going wrong?
One of the biggest risks is assuming the AI has got it right.
For example, using AI to record a client meeting, create a file note or fact-find and feed that information into a draft statement of advice can be an excellent use of the technology. But we’re seeing cases where advisers don’t sufficiently check what has been recorded, summarised or assumed along the way.
If important information is missed at the beginning, that error can flow right through to the advice.
Other common issues we’re seeing include:
- No clear AI policy or oversight of how staff are using AI.
- AI-generated meeting notes, summaries and advice drafts not being fully checked for accuracy.
- Tools, templates and prompts not being kept aligned with the FAP’s policies, advice processes and scope of advice.
- Privacy, record-keeping and data-retention requirements not being properly considered.
- FAP-developed calculators, projection tools and other AI tools being used without adequate independent testing.
Paying for an AI tool also doesn’t automatically mean your data is secure. FAPs need to understand how the particular tool handles and protects the information being entered into it.
What should you be checking?
If AI is already being used in your business, start by asking a few simple questions.
Do you know who is using AI, what they are using it for and what information they are putting into it? Are outputs being checked by a person before they are relied on? Have your templates, calculators and other tools been appropriately tested? And are AI-generated records being captured within your normal record-keeping systems?
AI can make an advice process faster, but the controls around it still need to keep pace.
Strategi can help
Strategi has developed a suite of services to help FAPs use AI confidently and appropriately, including AI policies, testing protocols and compliance tools for checking advice documents before they are sent to clients.
We are also carrying out independent testing of FAP-developed tools to check their accuracy and underlying assumptions.
If you’re using AI – or considering introducing it – talk to the Strategi Compliance team about putting the right controls around it so you can make the most of the technology without introducing unnecessary risk.