Artificial Intelligence (AI) is set to transform financial planning over the next 3-5 years. It will automate manual processes, efficiently converting tasks that currently take hours into minutes, reduce compliance burden and improve the quality of advice.
The impacts of AI extend far beyond financial planning and it will find its way into pretty much every walk of life. It already is.
Consider how Google interacts with you: instead of simply listing a series of websites, it now uses data to respond to your questions. Your mobile phone looks at your calendar to map your travel time, any preparation you might need and highlights anyone you might want to contact on the move.
AI will become as integrated into our lives as smartphones are currently connected to the palm of our hands. Even today, the chances of an individual using AI in their everyday life is more than 74%.
So, if I am so certain of its impact, why would I suggest that AI might be the next snake oil?
The history of snake oil dates back to the 1800s, when Chinese immigrants to the US, working on the railroads, brought their medicines with them, including snake oil. The Chinese snake oil was made from the water snake, which is rich in omega-3 and great for inflammation and treating issues such as arthritis.
If I am so certain of its impact, why would I suggest that AI might be the next snake oil?
After witnessing the positive effects of the Chinese water snake, local US entrepreneurs attempted to replicate it using rattlesnakes. Clark Stanley, also known as the Rattlesnake King, started to sell his own version. There was one major issue – Stanley’s snake oil was missing one vital ingredient: snake oil!
So, where’s the parallel to AI? Well, there are now 70,000 companies known to be working in AI. Over a quarter are based in the US and the majority are start-ups. The market will have grown 12 times over the last seven years. We have ourselves have counted around 50 firms who have said they have an AI solution for our market.
Every conference has someone speaking about AI. Most days someone will talk to me about it. And if you browse through Money Marketing, there is usually an AI article (and this one is adding to the list for good measure).
The challenge we see is that there are lots of people gravitating towards AI as the answer, and happy to charge a premium for either their advice or their technology to help. Our view is that there are some outstanding platforms starting to emerge and some groundbreaking solutions. However, for every couple that are brilliant, there are very many more that are not.
There are some interesting observations. Firstly, how many of the solutions are doing something that can’t be achieved by going directly to ChatGPT or Microsoft Copilot? Some solutions are just a fancy front end sitting on top of a solution that can be accessed at a fraction of the cost.
Secondly, many of the platforms require data to be held separately, rekeyed or duplicated from a core platform. Lastly, there is the issue of privacy and security. Few of the platforms we’ve evaluated have really understood how to maintain data privacy and some have failed our security testing.
Our advice for leveraging AI is to look towards solutions that either have been developed around one of the enterprise solutions (e.g. Microsoft, Salesforce, ChatGPT), or have been fully evaluated and tested by reputable parties.
Few of the platforms we’ve evaluated have really understood how to maintain data privacy
Also, be thoughtful about adding client data into them – there are private versions that can be used. I’m not suggesting that all the innovation will come from the bigger firms. After all, ChatGPT was only founded in 2015 as a not-for-profit research company.
Finally, if you see consultants knocking on your door promising you unfound riches for a few months of consultancy, think twice. You can get many of the immediate benefits by simply adopting some of the platforms that are out of the box.
Most of the established adviser technology providers will be launching AI-based solutions within their platforms. Our view is that AI should be embedded into every element of our future propositions. However, if you are going to get snake oil, ensure you don’t get rattlesnaked.
Ed Dymott is chief executive officer at Benchmark Capital
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