Young and inexperienced investors are increasingly turning to artificial intelligence for help with their money, trusting it more than television or celebrities, according to new data from the Financial Conduct Authority.
The FCA found that four in five less experienced investors have used AI to help with investing.
The findings, as you’d expect, drew a note of caution from the wealth management industry.
Graeme Devlin, head of risk, regulation and compliance for wealth and asset management at the consultancy Capco, said the numbers showed AI was meeting a need the industry had struggled to serve. ‘Advice’ from AI is quick, accessible and easy to engage with. Information from AI chatbots is very low-cost, if not free.
“It is also a sign that AI is meeting a need the industry has struggled to meet,” Graeme Devlin said.
But Devlin warned that a confident-sounding answer can appear reliable even when it is based on incomplete or outdated information and lacks a real understanding of the person asking.
Devlin argued that firms deploying AI face the same challenge: unless they can show where an answer came from, how it was checked and who is accountable, they risk eroding the trust they are trying to build.
“AI has changed what people expect. A chatbot can give someone an answer in seconds, so wealth managers cannot expect them to accept a slow and complicated route into advice,” Devlin explained.
“Firms need to be useful at the point where research starts, with clear information, transparent sources, and an easy route to regulated support. The proposition then has to offer more than another answer. It needs to understand the client’s wider financial position, goals, and appetite for risk, and turn that into suitable advice with ongoing accountability.”