Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
‘Context is everything’: What ChatGPT can do for advice, and what it really can’t
Language tools employing artificial intelligence such as Chat GPT pose very little threat to the ongoing work of financial advisers, but they do have the potential to add efficiencies that could help practices scale up and grow their business according to Michael Kollo.
Tools like ChatGPT will never replace advisers, he says, because people value relationships and build tight interpersonal bonds based on trust. But AI language generation tools can help advisers carry those relationships in a more efficient manner by assisting with enquiries, drafting emails and disseminating information.
In the same way robo-advice tools initially presented as a threat to financial advisers, but have settled as more of a tool that advisers have at their disposal, he believes ChatGPT will become just another arrow in the quiver for the profession.
Kollo is in a unique position to comment on the rise of ChatGPT and its applications across the financial services industry, having left a role teaching quantitative finance at The Imperial College in London to lead investment research teams at BlackRock and Fidelity before turning his hand to private enterprise with Qurious Analytics and Evolved Reasoning, consultancy firms centred on the intersection of technology, reasoning and finance.
The first thing to acknowledge about ChatGPT, Kollo tells The Inside Adviser, is its limitations.
“I wouldn’t think it is useful as an autonomous system, at least yet,” he says. “I certainly wouldn’t put AI-generated content in front of a client directly as a kind of an automated service.”
ChatGPT often gets information wrong, and at this point it’s virtual scraping tools don’t include information posted in the last 12 months. In essence, it’s an aggregation tool that has the key differentiator of being very good at synthesizing information into clear and concise communication.
It’s that ability, however, that sets it apart from its predecessors. It’s also what makes it a potential game changer for advisers.
Virtual cheat sheet
Kollo, who will present on the topic at The Inside Network’s Growth Symposium in Sydney and Melbourne this month, says that if used correctly ChatGPT can help advisers construct email responses to clients, put together educational pieces, explain investment concepts and become an all-round “cheat sheet” for advisers and their ancillary staff.
“Dissemination of information is very powerful,” he says. “If you think about what financial advisers do, a large part of their job is about disseminating, analysing and translating technical information.”
Whether it’s contained in a statement of advice or over email, ChatGPT has the ability to construct passages of text that not only address the objective, but accurately imitate the kind of nuance people associate with interpersonal communications. Expressions like “Hope you’re well” and “Thanks for reaching out” are part of a vast trove of phrases employed by the tool to emulate organic conversation.
Again, Kollo reiterates, communications generated by ChatGPT or any other AI language generator need to be checked by human eyes. But the potential time savings are significant.
Context is everything
The key to unlocking ChatGPT’s “efficiency augmentation”, he says, is to provide as much clear context as possible. Tell it exactly what response you want, how you want it written, from which perspective and for what purpose.
“One of the things that you learn about ChatGPT is that almost everything is contextual for it,” he explains. “The more context you’re able to provide, including things that you might take for granted like who you are, the better the output will be. You can do so much with it if you use clear messaging and simple directions.”
Kollo presents an example of clear and concise instructions that present a distinct use for the tool: “Summarize this piece from January for me, answering using simple language into two paragraphs of texts that will be appropriate for a board meeting.”
“And from that I get a simple, bullet-point response summarizing the text in appropriate language,” he adds. “In terms of the use case for advisers, this is a tool that allows you not only to summarize, but then translate for clients and pass on that information.”
[Note: The Inside Network’s Growth Symposium in Sydney (March 22) and Melbourne (March 29) is complimentary for financial advisers and asset consultants.]
