AI having ‘limited impact’ on advice gap despite adviser capacity gains

Artificial intelligence (AI) is having a limited impact on the advice gap, despite it providing gains in adviser capacity, according to NMG Consulting.

Its study found that 68 per cent of advisers expected AI to make advice more accessible, although the gains to date were flowing to existing clients rather than new ones.

While AI was already giving advisers back more time, just 19 per cent were using this improved capacity to take on more clients.

However, 51 per cent expected to take on more clients in the future due to the impact of AI, although 30 per cent were not planning to increase their client count.

Nearly half (46 per cent) of advisers using AI said it was enabling them to serve existing clients better, while the same proportion expected to be able to improve existing client service in the future.

The average adviser using AI was seeing a 10 per cent capacity increase from adopting AI in their practice, and expected this to triple to 30 per cent going forward as AI and their usage of it develops.

NMG said its survey on the impact of AI on advice showed a risk of further widening the gap to traditional advice.

Over three quarters (77 per cent) of advisers forecast no change in their fees, with just 3 per cent having already lowered their fees due to AI.

Only 5 per cent of advisers had expanded into previously unviable clients through AI, while 57 per cent had no intention of moving their client base to lower value clients.

Nearly one in five (18 per cent) advisers over the age of 50 were working less due to AI, and a further 48 per cent expected to reduce their hours as a result of the technology.

“AI is already shaping financial advice, largely for the better, improving outcomes for existing clients and advisers alike,” said NMG Consulting partner, Mark Fox.

“However, its impact on the advice gap through widening access to the traditional advice model today looks limited. This means a vast majority of UK consumers will still need to manage their finances themselves.

“The Mills Review shows the appeal of using AI for more complex decisions, but the risks as well, with a minority of consumers aware that there is no formal route for recourse if things go wrong.

“An experienced, human decision maker such as an adviser remains the gold standard, and one whose quality is improving with AI, even as it remains out of reach for many.”

---