NEWS & VIEWS
FSL’s Chain Mail is a regular blog containing links to news articles that we think are worth sharing. In this edition, we look at the subject of artificial intelligence (AI) and its possible impact on investors, private banking and wealth management:
The benefits of AI
The plethora of articles on the subject include many that focus on the potential benefits of the new technology. This one from Finextra tells us to “embrace the change and leverage the good that can come from it”. However, others give a more balanced view of both the benefits and challenges, such as this one in Forbes and this article by Private Banker International that asked ChatGPT what it thought the impact would be on private banking.
A substitute for human advice?
The main concern is whether AI will replace human interaction with investors. Professional Adviser asks whether ChatGPT means firms could only need one adviser in the future and suggests “it is in advisers’ own interests to embrace, rather than fight the tide”.
IFA Magazine delves further into the risk of AI to an independent financial adviser’s value proposition. And it’s not just IFAs, World Finance magazine examines the implication on the need for private bankers. It concludes “while AI will continue to play an important role in the financial industry, it is unlikely to present an existential threat to professional money managers. Professional money managers can use AI as a tool to enhance their decision-making process, but they will always be needed to provide the human expertise and judgment that AI cannot replace”. However, research by Boring Money has found that “only 7% of investors today would actively look to AI for financial advice”.
A few of the trailblazers
Many organisations are already testing the waters with AI. Details are emerging of how some cryptocurrency platforms are leveraging ChatGPT, as well as more mainstream wealth managers such as Morgan Stanley and JP Morgan. However, the key question for investors is could an investment fund developed by AI outperform others? Personal finance comparison site Finder has run a test on a fictional fund generated by ChatGPT and Finextra reports that it “significantly outperforming the average of the UK’s 10 most popular funds”.