AI making deep inroads in planning sector despite concerns

Artificial intelligence (AI) is seeing unprecedented uptake within the financial planning sector, with the technology yielding significant improvements in client engagements, despite ongoing concerns over the security and the accuracy of outputs.

In a snapshot industry survey conducted by the Financial Planning Standards Board (FPSB), the international standards-setting body for the planning sector, 50% of the more than 6,200 surveyed financial planners take a positive view on AI; just 8% view it negatively, while 41% remain neutral.

Uptake is strong in the industry, with nearly two-thirds (64%) of respondents reporting that their firms are using AI technologies or plan to do so over the next 12 months.

The desire to implement AI is primarily driven by an internal business demand (61%), rather than a push from industry or clients, the survey found.

Adoption rates remain highest among small (2-10 planners), where upwards of 75% were actively using or planning to use in the near-term, or very large firms (150 or more planners), with adoption or prospective adoption rates of 65%.

The most common use of AI is for client communications and engagement (41%), while many planners are also actively deploying the technology for client data collection (33%) and client risk profiling (30%).

More than three out of four planners (78%) are positive about AI’s ability to help better serve clients, while 60% believe it will enhance the quality of financial advice.

As well, 59% of planners believe the technology will help to reduce the cost of financial planning services, while 60% believe it will increase access to financial planning for underserved populations.

A little over one in three planners (35%) are also deploying AI in their marketing and promotions and for client onboarding (34%), while a similar number (33%) are also utilising AI to optimise operational productivity and workflow (33%).

“Respondents were generally optimistic about the potential of AI to enhance the quality of financial planning advice, reduce costs and broaden access to financial planning for underserved populations,” the FPSB found.

Third-party vendor solutions are the most popular choice for AI adoption (used by 45% of respondents), while more than one-third (34%) are leveraging in-house developed solutions.

The research showed that a wide array of AI models being deployed by planners, with notably active use of large language models or generative AI systems (for instance, ChatGPT, ClaudeAI, and Gemini), deployed by 43% of respondents, built-in AI systems in advice software (38%), as well as robo advice tools (35%), among others.

However, respondents were conscious of the potential pitfalls of AI adoption, with many (47%) expressing concerns over the potential weakening of their data privacy and cybersecurity controls.

More than two-fifths (42%) of respondents were also concerned about the accuracy and reliability of AI outputs.

As well, nearly a quarter (24%) cited concerns about potential deterioration in client engagement, noting the lack of human touch associated with AI systems use.

Concerns over AI’s potential to displace jobs (13%), cause regulatory compliance issues (9%), and its cost of implementation were notably less prominent among survey respondents.

As well, a dearth of training and professional development opportunities to help planners better leverage AI technologies was acknowledged.

Nearly half (49%) of the respondents expressed a need for professional development to improve their data analysis and interpretation skills, while over a third (36%) believe both the public and the financial planning profession will greatly benefit from general education and training on AI.

Commenting on the results of the survey, FPSB chief executive Dante De Gori said the industry is witnessing a “pivotal moment” as planners embrace AI technologies.

AI, he added, is helping planners “to work smarter, allowing more time to engage in deeper human connection with clients, such as navigating difficult conversations that impact financial decision-making and providing clarity and support to stay on track to achieve their life goals.”