In our latest parameters survey of the paraplanning community we asked for your views on the use of AI in paraplanning and what the potential impact might be. Fiona Bond reports on the results.
Technology has the potential to reshape the financial services industry, with new developments poised to increase efficiencies and boost competitive advantage.
According to PricewaterhouseCoopers, technology could lead to the potential automation of up to 30% of jobs by mid-2030s but what does this mean for the advice and paraplanning industries?
Our latest Parameters Survey revealed that 25% of paraplanners believe technology, such as artificial intelligence will be used to take more of the ‘admin’ out of the paraplanning/administration process this year, double the 12% who do not believe it will. One in six (14%) said they were unsure.
One paraplanner said: “AI does seem to be becoming more and more popular so I would anticipate that the number of paraplanners and advisers using it is likely to increase further in this year and beyond.”
Another said firms will want to be seen as keeping pace with other industries and embracing technology.
However, many paraplanners agreed that the process is likely to be slow, with 49% of paraplanners stating that they do not expect it to have much of an impact this year, but potentially from 2025 onwards.
Legacy systems, a reliance upon paper and wet signatures as well as a lack of understanding of the tech space were all cited as reasons why the adoption of AI is unlikely to happen immediately across the paraplanning and advice sector.
“There will be very slow progress in my opinion while providers still operate manual processes and have many different legacy products using old IT,” one paraplanner explained.
The sentiment was echoed by a fellow paraplanner, who commented: “I believe that AI is still in its very young days and we need to work out how best to use it in the industry. Unfortunately, some providers are still living in the past and require a wet signature to proceed with business so I don’t see the industry adapting to AI overnight.”
Another told Professional Paraplanner: “It feels like it will be a while before AI can truly make an impact on paraplanning because it’s quite complex and AI should be very sophisticated to be able to really help and save lots of time. That’s how I feel about it for now but the future is certainly full of new tech and enhancements which will make life easier.”
For one respondent, the speed of adoption will likely depend on the agility of individual firms.
“A big company like ours with generally cautious IT teams are unlikely to be in a position to be rolling out AI solutions anytime soon,” they said. “However, a smaller, more nimble or more technology-driven advice firm might be willing to experiment at a quicker pace.”
What impact AI on paraplanning?
The survey asked paraplanners how they feel about the greater use of tech and AI within paraplanning. A large percentage hope that it will be a positive move if technology can take on responsibility for more basic and repetitive tasks, allowing paraplanners to focus on the planning and client goals element.
One respondent told Professional Paraplanner: “I am all for it. I think client experience and understanding is a top priority and tech/AI will be a large part in helping with that.”
A fellow paraplanner echoed the sentiment: “I feel positive. I think that it will assist with greater efficiency as well as allow paraplanners to provide greater value in other areas to benefit clients, advisers and the business as a whole.”
However, the findings of the survey also revealed a level of unease around the extent to which AI could take over and whether it would threaten job security in the future.
As one paraplanner told Professional Paraplanner: “It is a little unsettling how it will impact in the future. Right now it could be a help in being used for more basic transactional advice like simple ISA contributions etc. but the concern is it creeps more and more into other areas and who knows what the future impact may then be.”
Another respondent admitted: “I think it’s great for reducing workload but it does make me feel concerned about job security.”
The sentiment was reflected in another paraplanner’s response: “I feel nervous. I think there are opportunities for efficiencies that I would like to explore but I’m worried it is the beginning of the end for paraplanning.”
Paraplanners also raised concerns that technology would not be able to emulate the human aspect required in financial advice. The use of AI to complete client reports could lead to correspondence that is “too templated and lacking personalisation”, paraplanners explained.
Many agreed that their clients appreciate a personal, bespoke approach and AI would be unable to provide this.
One respondent said: “I think it will have its uses but I don’t think it will replace the ability of a person to analyse a situation and really understand the soft facts.”
The survey also unearthed concerns around technology inadvertently introducing incorrect information and the worry that if firms were to become reliant upon AI, genuine technical knowledge could suffer as a result.
In addition, respondents also raised a question mark over how client details and holdings would be retained on the AI platform and how that information could be properly protected, particularly if a parent company is non-UK based.
One said: “It’s better used for generic wording or helping me to summarise something. I don’t think it should be used with clients’ personal data as the data protection risks are too much. I would worry that the personal information could be exploited or used again.”
As one respondent added: “We need to be careful that we use AI in a way that is genuinely value-adding and not just trendy.”
See also: Will AI be paraplanners’ Spinning Jenny?
Main image: robynne-hu-HOrhCnQsxnQ-unsplash
