AI is here to stay, but don’t cheap out

Artificial intelligence has rapidly moved to the forefront of any discussion about streamlining processes and leveraging technology to improve businesses – and financial advice is no exception.

According to Dr Irene Guiamatsia, head of research at Investment Trends, global tech giants have committed more than $300 billion of capital investment into AI for 2025 alone.

“I think that’s just tells you the scale of the transformative power that those firms see in AI,” Guiamatsia said on a panel at the SIAA conference on Monday.

“The other thing to mention is the adoption curve is just phenomenal. How quickly this technology has been adopted just by general population. I think OpenAI, which is ChatGPT, report something like 500 million weekly active users.”

According to Guiamatsia, this is an “unprecedented acceleration of usage” and a clear message to the financial advice sector that AI can help manage the growing advice gap.

“Advisers are struggling with the compliance burden and the need to actually extract efficiencies from their practice,” she added.

“It is absolutely no surprise to see that they will be really open to adopting tools that can help them overcome that gap.”

Citing Investment Trends research, Guiamatsia said advisers are primarily interested in utilising the tech for those efficiency gains, though noted they are often wary of AI having access to client data as they are “traditionally very protective” of this information.

“When we ask advisers, the figures are, 37 per cent say that they’re already using AI to a degree. Now, it’s important to see in the 37 per cent there’s a tranche of only 5 per cent who say they use it extensively,” she said.

“There’s certainly a huge appetite, but very little deep usage. I think that speaks to the fact that many need education and so on ... But then also on the supply side, maybe the tools to assist advisers are not quite where they need to be.

“Specifically, advisers are using it for things like edited file notes, that’s some of the secondary usage research and so on. But what we have seen, it’s really those back-office tasks, but then, right at the bottom of the pile is things like investment research or investment selection. So again, in terms of the stratification of what advisors think this should be important for it’s really, you know, the tedious task in the first instance.”

Importantly, while 64 per cent of advisers are looking for education on how to implement AI tools, Guiamatsia noted that data security is the second most important area and highlights the need to avoid relying on unpaid tools.

“Free AI tools, I think they often say that if you’re not paying for it, you are the product,” she said.

“I think in the context of financial services, it’s really important to safeguard client information and have a degree of privacy around the information that we are using.

“We don’t think that many advice practices are actually using free AI tools in the context of conducting their business. We do see 20 per cent of advisers saying that they’re not using AI and they have no intention of starting, and that’s because they have some really strong reservations around accuracy.”

She added: “I think it’s important to reiterate, advisors are very alert the fact that they cannot be absolved from their regulatory obligation and their fiduciary obligation, and so it’s really, really important for them to understand what they’re doing, how they’re using these tools, in order to actually be able to comply with the AFSL obligations.”

CFS Edge investment platform group executive David Pritchard added that this is among the “primary reasons” the firm works with Microsoft.

“Doing that due diligence to really understand exactly what’s happening to the data once it leaves your keyboard, where’s it going, which jurisdiction? How’s that getting managed, so on and so forth in a highly regulated industry, it goes without saying that that management of client data is absolutely crucial,” Pritchard said.

Armina Rosenberg, co-founder and portfolio manager at Minotaur Capital – an investment manager that uses AI “for absolutely everything” – also cautioned against free AI tools.

“Make sure you pay for whatever tools you’re using. If they are free, it’s definitely potentially public or trainable,” Rosenberg added.

“You can see that with Claude, if you want to share one of your searches off Claude, it tells you straight away, ‘Just so you know this is going to make your search public’.

“ChatGPT is $20 a month. You’re not going to break the bank on that one. So, yeah, pay for it.”

ifa is hosting the Adviser Innovation Summit 2025 across June in Sydney and Melbourne to explore the trends and practices emerging in the financial advice sector. To learn more, click here.