Conversations in the advice landscape are dominated by the impact AI. Inescapable at this point, part of this conversation is, necessarily, what some of the reasons why advisers are might be reluctant to begin the integration process into their practices.
Appearing on the ifa Show Podcast, Direct Wealth technology manager and Halosoft co-founder Nick Downey highlighted cyber security concerns is one of the biggest points of reluctance he recognises.
“There’s still hesitation around fully adopting AI into advice businesses, and it’s not because advisers don’t want the technology. The biggest limiting factor is cyber security,” he told the podcast.
“We deal with people’s money, so the risk is front of mind. Licensees are getting hammered on security standards, and when you bring in AI the immediate questions become: where’s the data processed, where does it go, and who can access it?”
Cyber security concerns surrounding AI are multifaceted. With any form of digitalisation, fears of vulnerability to cyber criminals is core, however, AI adds the issues of data sovereignty to the equation.
“A lot of vendors say their data is stored in Australia, which sounds like it solves the problem, but most people don’t realise the actual AI models are still sitting on servers overseas,” Downey explained.
“So, even if your database is in Sydney, the moment that information is processed by a model in the US, it’s essentially gone.”
For Downey, the key issue for advisers who are reluctant to adopt AI is trust.
“Advisers worry they’re handing over the keys to their castle to something they don’t properly understand.”
He added that fears of AI eventually replacing advisers as a concern: “It’s a valid concern, and it adds to that sense that AI is a black box making decisions you can’t fully see into.”
These concerns are valid, however in an era in the industry where operational and regulatory costs are rising, AI can help provide efficiency and time saving gains that could make or break a business, benefits a sceptic may miss out on.
For Downey, the best way to quell concerns is through showing sceptical advisers tailored made systems at work.
“The moment they use a good AI tool for the first time, their whole attitude changes immediately. The hesitation disappears because they can feel the time they’re getting back,” he said.
“The biggest mindset shift happens the moment they realise the hours they used to spend on back-office admin just aren’t required anymore. When AI hands them back that time instantly, the fear and uncertainty evaporate.”
He added: “You can explain AI to advisers all day, but it doesn’t compare to simply showing them the output. The moment they read a meeting summary or file note generated by AI — tailored to their style — that’s when everything changes.”
To hear more from Nick Downey, tune in here.
