Will AI be a D.I.V.O.R.C.E or a new start for advice?

AI is undoubtedly an ever-growing talking point within financial services, although much of the discussion to date has centred on efficiency, productivity and automation. 

Firms are looking at how AI can reduce their administration burden, improve processes and help clients access information more quickly. However, a recent FCA publication on emerging technology suggests we may be on the verge of something far more significant.

The regulator's report entitled, ‘Emerging Technology Horizon Scan’, explores the possibility of consumers increasingly delegating financial decision-making to AI agents that can search, compare, recommend and even act on their behalf. Rather than simply helping people make decisions, the FCA envisages a future where technology could actually make many of those decisions for them. 

In many ways, this represents a shift from a do-it-yourself model to do-it-for-me, and raises some important questions for advisers. Not least because you get the real sense that this is already happening.

Convenience has always driven consumer behaviour

Consumers have consistently embraced technology that makes life easier. Online banking replaced branch visits. Comparison sites reduced the time spent researching products. Digital application processes removed paperwork and shortened timelines, and in financial services you can buy and sell shares at the touch of a button.

Against that backdrop, it is not difficult to see why the prospect of an AI assistant managing aspects of a person's financial life could prove attractive. If a consumer can ask a digital assistant to find a mortgage, compare products, complete forms and monitor future opportunities, many will see value in that proposition.

The attraction is obvious because most people do not wake up in the morning wanting to spend hours researching financial products. They want outcomes. They want solutions. They want confidence they are making sensible decisions. The challenge is those financial decisions are rarely as straightforward as they first appear.

Context still matters

One of the more interesting recent examples of using AI in such a way came from an individual who asked an AI platform how to reduce their tax bill and was advised to move to Monaco. While technically correct, it was hardly practical advice for somebody living and working in Croydon.

That example neatly illustrates one of the key limitations of AI. It can process enormous amounts of information and provide answers at remarkable speed, but context remains critical.

Advisers deal with context every day. Clients rarely arrive with a simple product requirement. They arrive with life circumstances, ambitions, concerns and competing priorities. A first-time buyer may be worried about affordability. A self-employed borrower may have complex income arrangements. A client approaching retirement may be balancing mortgage needs against pension income and later life planning.

These are not simply product decisions. They are personal decisions.

Relationships may become more valuable, not less

Many commentators frame AI as a threat to advice, but there is another way of looking at it. If consumers increasingly rely on technology to gather information and complete routine tasks, then the adviser relationship itself becomes more important. After all, information is becoming easier to access, but trust remains difficult to automate.

The most successful advisers are rarely valued solely because they know which lender offers the lowest rate. They are valued because they understand their clients, challenge assumptions, identify risks and help people make decisions with confidence. That role does not disappear in a world of AI. If anything, it becomes more valuable.

As technology takes care of more transactional activity, advisers have an opportunity to focus even more on guidance, judgement and long-term planning.

What does this mean for Consumer Duty?

There is also an important regulatory dimension to consider with all of this. After all, this report came from the FCA themselves. Within this, the regulator has highlighted concerns about consumers becoming less engaged with their financial affairs if decision-making is increasingly delegated to AI systems. That raises interesting questions around understanding, accountability and outcomes.

If a consumer instructs an AI tool to find and arrange a mortgage, how can firms be certain the recommendation genuinely reflects the customer's circumstances and objectives? How can they be confident the consumer fully understands the implications of the decision?

These questions are unlikely to disappear and may become more prominent as the technology develops. For advisers, this creates an opportunity to demonstrate the value of informed human oversight alongside technological capability.

Advice remains a people business

None of this should be interpreted as an argument against AI. Used properly, it has enormous potential to improve efficiency, remove friction and help consumers engage more effectively with financial services.

However, the emergence of a do-it-for-me culture should not lead us to conclude that human advice becomes less important. The reality may be quite the opposite.

The more consumers delegate tasks to technology, the greater the need for trusted professionals who can provide context, challenge AI-generated responses and help people understand the consequences of major financial decisions.

Technology will undoubtedly change how advice is delivered, but I suspect it will reinforce a truth that has existed throughout my career. Mortgage advice is, and always will be, fundamentally a people business.