AI is not some distant concern for advice anymore; it has arrived and, for the most part, the profession is adapting. While AI coverage in advice is not as extensive as international markets such as the US, 82 per cent of Australian advisers are looking to use AI within their practice, according to one study.
While plenty of practices have demonstrated how AI can be applied in situations such as self-licensing, the FAAA’s Ben Marshan told the latest episode of the ifa Show Podcast that there is one area where practices are falling behind: governance and compliance policies.
“From the research we saw that 64 per cent of practices were using AI in some form, only 45 per cent had a policy in place, even in a basic form, and only 17 per cent had comprehensive policies,” Marshan told the podcast.
He added: “But even when you have a policy in place, you need to test it and make sure you’re complying with it. You’ll regularly audit client files to check you’re complying with your advice process rules and regulations, and you’ll run cyber security checks to make sure your systems are secure.”
Marshan elaborated on this by giving a case study of a practice that had created clear and thorough AI policies. However, six months in, the practice became lax because they were “too busy with other things”.
“By the end of the year the AI was generating marketing content, podcasts, LinkedIn posts and Facebook posts, and one of those posts was clearly identifiable within the community because those policies were no longer being followed, tested or properly enforced,” he said.
The biggest mistake this practice, in Marshan’s opinion, was feeding too much data to the AI, creating data security risk, highlighting that this needs to be core to any good AI policy.
“Are you making sure you’re protecting your clients’ data and information in a way that’s appropriate as a professional? Are you being diligent in making sure the systems and tools you’re choosing are the right ones, rather than simply trusting what’s written on the box or on the website?” he said.
“You need to dig in and understand how those systems actually work.”
He added that AI is powerful tool in uplifting practices, and he encourages all to try and apply it where they can. But with any new technology comes risks, and the only 17 per cent of practices with comprehensive AI policies needs to be uplifted.
“I don’t want that to sound like don’t use it, because the productivity gains that can be made by leaning into these new forms of technology are exponentially huge, but you need to be doing it in a safe, professional, legally complying manner to make sure that you’re properly protecting your client.”
You can catch the full episode with Ben Marshan here.
