Australia is currently in the midst of a ‘Silver Tsunami’ of retirees, with trillions of dollars expected to change hands. This should be a boom time for advisers – and in some ways, it is – but a persistent gap remains between the advised and unadvised.
Digitalised advice has been positioned as one of the core solutions to this advice gap, with AI inevitably coming into the picture in these conversations.
However, if new PwC research is to be believed, those in need of advice the most are also the most resistant to AI.
According to the PwC findings, 68 per cent of respondents aged 61-79, the most immediate in need of help, said they would not use an AI-powered tool for financial advice. That figure drops significantly among 18-28-year-olds to only 19 per cent.
“AI still has a role to play in serving older members,” PwC said.
“However, AI investment decisions need to be made segment-by-segment, and must be grounded in behavioural evidence, to genuinely reduce the advice gap.”
Like many pushing for broader AI coverage, PwC emphasised their belief that advice still needs to be human-led, stating its greatest strength is streamlining the advice process, using AI to scale impact rather than replace.
The consultancy firm highlighted that their research found 20 per cent of organisations capturer 74 per cent of AI-driven value, achieving gains 7.2 times higher than their peers.
However, segments of the population, particularly the older retiree demographic, are still resistant to AI. For PwC, it is therefore important to segment how AI is applied.
For younger Australians, a tech forward advice process can be easily implemented. However, for older, sceptical Australians, a more cautious is warranted.
“This segment needs human-led advice at the life stage where advice is most complex and most expensive to deliver,” PwC said.
“The paradox is urgent because it is temporary. Whether the resistance in this oldest cohort is purely generational is worth asking.”
The consultant added: “AI’s role here is to restructure the cost base behind human interactions.
“Think: preparation tools that assemble a member’s financial picture before the conversation; triage systems that identify members approaching decision points and route them to advisers at the right moment; scenario modelling that gives an adviser pre-built retirement income projections to walk through rather than building each from scratch.”
Some of the doubts may not be ill-founded. AI is far from a perfect tool, and can ‘hallucinate’, or produce false information that it presents as fact.
Core to any advice set up, whether it be a boutique self-licensed firm or a large-scale digital offering from a superfund, is data security, which AI creates a level of risk around, according to adviser Nathan Fradley.
“As soon as you use the AI tool, it has to leave the country. As soon as the system is operating, it leaves Australia, and therefore the data leaves.”
“So, unless my tools are de-identifying it before it sends it away, which mine certainly wouldn’t be, we’ve got a problem. That’s the same for all these other tools that just use AI.”
He emphasised that these concerns about data security are holding back some advisers when it comes to AI integration.
“There’s this real push to use these tools, and we forget where data is, where data is being stored. I feel like that might save us one day in the amount of client data that ends up in unsecured plagiarism machines. We’ll be sitting there going, ‘That’s lucky that my client data isn’t over somewhere else in a way that I can’t control it’.”
Regardless, PwC, as well as super funds, platforms and individual advisers, are presenting AI as a solution of Australia’s advice gap.
“The members who most need help are the ones who will only act if they trust the advice experience,” PwC said.
“How funds respond will shape whether AI-enabled advice reaches those who currently go without or simply shortens the wait for those already in line.”
Pilots replaced by AI. Nope. Advisers replaced by AI – ditto. The weekly discussion with clients about Collingwood FC losing wouldn’t be the same. Politicians replaced by AI – yes please.
These surveys are all about how a question is asked. Questions like do you want to pay more tax ? answer 100% no.
One wonders what the survey outcome would be If the survey asked “would you engage with an Australian Licensed provider of advice that worked within the regulations, that used AI to help you uncover your needs and then provided advice at 90% less than a face to face engagement would you be interested ?”
Not that PWC are engaged with or know anything about digital advice one might add…it’s a typical survey to enable them to get consulting gigs with the large wealth groups that are committed to face to face one would opine.