Readiness, not capability, will decide who benefits from AI in advice 

Practices have spent much of the past couple of years exploring what artificial intelligence can do, as new tools arrive at a remarkable pace and firms test productivity gains across every aspect of advice. With regulation evolving more slowly than the technology, many firms must make significant strategic decisions before the long-term governance framework for AI has settled.

Denis Orrock, acting CEO of Praemium, believes that uncertainty should not be a reason to sit on the sidlines. In a recent feature article, he argues that the question for advice leaders has shifted from what AI can do today to whether they have prepared their business for what it will demand tomorrow.

“The firms best positioned over the next decade won’t necessarily be those deploying the most AI. They’ll be the ones building the foundations required to adopt it safely, confidently and at scale,” Orrock writes. 

Governance 

Orrock sees governance starting to look less like a handbrake on innovation and more like an engine. While boards and executive teams understandably gravitate towards new capabilities, he suggests the more practical question is whether the operational foundations are in place to support them.

Data quality, governance frameworks, control environments, auditability and education are, he says, part of the same problem. They are not separate issues that firms can solve later.

“Financial advice has always run on accountability. Every recommendation, every client outcome and every decision has to be explainable and defensible. That obligation doesn’t soften in an AI-enabled environment, if anything, it gets harder.” 

Hence the importance of working on the foundations now. That way, firms can leverage scale in the months and years to come.

“If an AI-assisted process influences a client outcome, who is accountable for that outcome? If a regulator asks how a decision was reached, can the firm demonstrate the steps involved? And if governance expectations tighten in the years ahead, which they will, do today’s processes stand up to scrutiny?” 

While the regulatory framework will keep evolving, Orrock expects the principles that underpin advice to hold, with clients, regulators and stakeholders still expecting transparency, oversight and accountability. 

Simplicity 

Orrock cautions against treating artificial intelligence as something to bolt onto the business as it already is. 

“Many wealth businesses still operate across multiple systems, fragmented data sources and manual processes that have evolved over many years. AI will not necessarily solve those issues, more often, it will expose them.” 

Firms that simplify their operating models, remove unnecessary complexity and build more consistency across their data and workflows will be better placed to take advantage of the opportunities ahead, he says. 

“The long-term winners may not be those with the most sophisticated AI strategy on paper. They’ll be the ones that have simplified their technology, cleaned up their data and established the governance required to move faster as the market evolves.” 

Capacity 

Much of the debate around AI gravitates towards automation, but Orrock considers the more important question to be what becomes more valuable as automation increases. The advice profession exists because clients face decisions that require judgement, context and experience. 

“Technology can widen access to information, reduce administrative burden and streamline repeatable tasks, but it cannot replace trust, nuanced decision-making or the ability to guide a client through uncertainty. In fact, those qualities will become more important.” 

Already facing a significant advice gap, in which demand outstrips the profession’s capacity to supply it, Orrock sees potential for artificial intelligence to increase adviser capacity.

That would allow professionals to spend less time on process and more time on client relationships, strategic thinking and complex problem solving. He also expects client expectations to rise over the decade ahead, with investors looking for faster service, more personalised experiences and easier access to information. 

“Success may ultimately have less to do with AI itself and more to do with the foundations beneath it,” Orrock writes.