AI is upon us. AI and Financial advisory are changing rapidly. Anything with a process can be automated and delegated away. This means that many tasks and jobs do get delegated away. However, accountability and responsibility cannot be delegated away. When the shit hits the fan, in the court of law, a legal person is to be held accountable, not an algo. That said, humans need to attain competency to check the AI output and take responsibility for it. If an AI-driven recommendation leads to a client’s financial detriment, who is liable? Is it the AI developer, the financial institution deploying it, or the advisor who relied on its output? Quite a complex question of responsibility. It is like trying to assign blame when a self-driving car crashes – who is to blame?

AI and Financial Advisory Process

Much of the current financial advisory landscape is based on the proposal acceptance arrangement. What this means is that the advisor proposes, and the client has to accept before execution takes place. If there is a dispute, the client does have to take some responsibility for accepting the recommendation. If there is a factual error in arriving at the recommendation which the client accepted and suffered for, the advisor is at fault. Since financial advice in Singapore is largely proposal acceptance driven, no harm acquiring additional proposed recommendations from AI for consideration, correct?

Financial planning follows a process. And parts of the process, the AI machinery can definitely do faster, better and cheaper than a human. Which parts are they? AI is fully capable of collating information and crunching numbers, rule-based analysis and recommendations, basically offering mass customization at scale. With enough context and inputs, it is like having a personal finance coach who never sleeps and never judges your late-night online shopping habits. I think all of this is good, making basic financial advice more affordable (because it would be a lie to say advisor reps do not use AI) and widely available than ever before. This is particularly impactful for those who might have felt traditional financial planning was out of their reach. (I recall a concern that fee-based advice will make financial planning inaccessible to the budget constrained but that’s all in the past now.)

AI excels at cognitive matters

The praise for AI continues. It is becoming our most formidable co-pilot. AI can identify patterns and correlations that would be invisible to the human eye, offering insights that can lead towards more robust, personalized recommendation. It is like having a super-powered research assistant working tirelessly behind the scenes. It is a seismic shift really, and understanding its impact is crucial for both advisors and those seeking guidance.

You can submit PDF documents to the AI and ask it questions that are meaningfully relevant to you. For example, you can ask what the limitations are. Be sure to ask the AI for reference in the submitted document (ie Page and paragraph) to verify its conclusions. You can also get AI to do comparisons by submitting the documents you want compared. Notebook LLM by Google is very good for these because the way it works is different from other AI tools out there.

The company that I represent, has issued instructions to its representatives not to upload any data containing PII (Personal Identifiable Information) to external tools. And that if the use of such tools is absolutely necessary, ensure that all sensitive information is properly anonymized or removed beforehand. This is understandable as we cannot know for sure how those systems will handle sensitive information. But AI usage is inevitable.

AI and issues associated with trust

At this point in time, we might be raving all about AI but human advisors are still relevant for certain aspects. Life does not always fit neatly into an algorithm. Divorce, legacy planning, business succession, elder care – these highly personal and emotionally charged situations simply require nuanced discussion, ethical considerations and a deep understanding of human relationships. AI is not equipped for qualitative judgement of interpersonal relationships. For example, the extent of sibling rivalry and preferred caretakers do affect legacy planning allocation considerations.

At the very core, financial advice is built on trust. Clients confide their deepest financial hopes and fears to their advisors. This trust is earned through consistent human interaction, demonstrated empathy, and reliable guidance – qualities that AI, for all its brilliance, cannot replicate. You trust an algorithm with data, but you trust a person with your future.

As such, this much is clear. Splitting financial advice into cognitive parts and emotional parts, AI will handle the cognitive for the human to handle the emotional parts. AI complements the human advisor so that he/she has less wrangling with spreadsheets and as a result, listens more with empathy.

Isaac has the StrengthsFinder – Individualisation strength alongside analytical focus and learning strengths. If you feel that Isaac can be your trusted steward in your personal finance matters. Make an appointment today!

PS: This writing does include some works from AI. But it was heavily edited for authenticity as well.