AI forecast to take care of majority of advisor loan deals

Julian Fayad told Good Returns a “vanilla” loan, where the applicant is in long-term employment and a high income earner could be managed by AI which can work faster and more smoothly than a person can.

“The shift will be that people will be still doing the role of the broker, but they’ll be using their own AI or the AI they license from other people who’ve built it, will be doing the 80% and they’ll be required to handle only the edge cases.”

It would likely lead to some advisors with limited skill sets being swept up into larger groups or perhaps even leaving the industry, he said.

Advisors would be leading the build of AI tools but “not every broker is going to have the ability to invest millions of dollars into R&D and trial and error so partnerships will be important,” he said.

New ways of working

Advisors would need to change the way they operate but Julian Fayad believes AI creates more opportunities than problems – for most.

“I think they’ll become more specialised, more niche, they might be doing more SMSF, more complex transactions with multiple trusts, friends buying properties together.”

“Let’s look at a big bank, they might use a framework and choose the clients they want because they can fully automate and lower the cost to serve, which can leave those fringe customers or edge cases underserved.”

It would not result in mass job losses, said Julian Fayad, but would allow businesses to streamline.

“People will just move higher up the value chain, you’ll have fewer administrative people in the business and more people advising, strategising and building wealth.”

Will regulation stand in AI’s way?

The Financial Markets Authority this year dipped its toes into AI waters with an initial research paper, which noted the cautious approach financial services providers were taking with the use of AI, carefully assessing the risks before integrating the technology into their already- established compliance processes.

All of those organisations surveyed said they were playing it safe, introducing AI-specific risk frameworks and emphasising the importance of staff training. Organisations are already using AI to create customer communications which are then checked by an advisor, maintaining a significant level of human oversight.

Julian Fayad said trust in AI would grow as it developed further but regulators would have a hand in determining at what pace organisations could come to rely on it.

“It’s the same thing with self-driving cars, how good do they need to be before they don’t need a person in the driver’s seat. How long until the regulators are ok with that type of thing for a loan? How long before they’re comfortable that Financial Advice Providers can be robots essentially or AI models?”