A recent report by Forbes Insights and Temenos suggests that wealth managers must embrace the development in Artificial Intelligence (AI) technology in order to sustain a long-term future. The use of AI technology allows financial advisors to provide high quality, customised client advice.
There has been a significant rise in the attitudes of wealth managers towards AI since 2016 with global statistics showing that 52% of wealth managers now view AI as essential in their business operations. In Asia-Pacific, this statistic is substantially higher with 70% of wealth managers viewing AI as essential and 80% deploying or testing AI.
The report also finds that there are generally positive views towards robo-advisers by wealth managers and the survey shows that clients are now viewing human interaction as less important when giving financial advice.
Whilst there is an increase in use and attitudes towards AI, providers of digital advice in Australia must consider the Australian Securities and Investment Commission (ASIC) Regulatory Guide 255 (RG 255) prior to launching a digital advice service. RG 255 considers the issues that persons providing digital advice to retail clients need to address when operating in Australia. In RG 255, ASIC made the following suggestions:
- providers should take a user-focused approach and put the client’s needs first when designing their communications and disclosure;
- start-up fintech business wanting to provide digital advice need to first obtain a AFSL or become an authorised representative of an AFS licensee; and
- despite there being no natural personal directly giving the advice, ASIC require that the licensee has at least one responsible manager who meets the training and competence standards required by AFS licensees.