Digital advice could help ‘unserviceable’ clients

The growing advice gap is one of the largest issues facing the profession, with falling numbers of advisers meaning that many potential clients are out of reach, either because the adviser is too busy or the client simply cannot afford advice.

As it stands, many of those who feel they are locked out of advice are relying on free to use digital technology such as ChatGPT for advice. While these free AI platforms are capable of giving advice, they lack the specialisation needed for targeted planning and can be prone to error.

“We have had both advisers and their clients [that] use ChatGPT get given completely wrong and non-compliant advice,” My Dealer Services managing director Alex Euvrard told ifa, referencing a phenomenon in AI known as “hallucination”.

While it is sign that many want advice, free tools still do little to close the gap and direct potential clients away from advisers.

According to DASH Technology Group (DASH), specialised digital advice technology can play an important role in helping close this gap.

Differentiating between robo-advice (which is typically algorithm-driven and passive), Cameron O’Sullivan, head of digital advice at DASH, highlighted the more advanced capabilities of digital advice.

“Digital advice leverages advanced algorithms to deliver high-quality strategy advice and triage effectively to an adviser when needed,” O’Sullivan said.

He offered simplifications to retirement planning as an example, saying that “digital advice is transforming retirement planning by making it simple, accessible, and intuitive”.

“It shows clients exactly how much income they can afford in retirement, helps them identify what’s needed to achieve their goals, and provides tailored suggestions to close any gaps,” he added.

O’Sullivan further explained how this kind of advice can boost client confidence, allowing them to make informed decisions without needing the extensive financial knowledge.

“By removing the complexity of decision making, customers don’t need deep financial knowledge to navigate confusing contribution choices,” he said.

DASH added: “It makes the journey feel personalised rather than one-size-fits-all. It builds confidence as clients know they’ll either get quick, accessible answers for simple questions or be referred seamlessly to more comprehensive solutions if their situation requires it.”

These capabilities of digital advice are particularly helpful for potential clients who have complex investment needs but are locked out of regular advice due to cost constraints.

However, this kind of technology, especially AI, still has some distance to go in terms of being able to offer highly tailored advice and cannot ever fully fill the role of a good adviser.