• AI and ChatGPT likely to have growing role to play in finance sector
  • ChatGPT seen as good at collating information and providing explanations but not capable of complex advice
  • Human financial advisors seen as best at managing behaviour and providing advice to suit different situations

Since US artificial intelligence (AI) company OpenAI launched ChatGPT in November 2022 the chatbot has become the fastest growing consumer application in history.

There’s been plenty of talk about just which professions ChatGPT and AI has the potential to replace or at least complement, among them financial advisors.

The financial advice industry in Australia is  facing a shortage with rising costs and new professional standards following the Hayne Royal Commission. Many have simply called it quits.

There are now only ~16,000 advisors in Australia with costs of financial advice also reportedly rising.

So could AI fill the void with the likes of ChatGPT being the future of financial advice?

Robo-advisor Stockspot not yet convinced on AI

Stockspot has been at the forefront of AI in the financial services sector in Australia, being the first and largest robo-advisor (online investment advisor).

Based on an online questionnaire, Stockspot has built software and algorithms that determine risk profile and goals.  The platform recommends an investment strategy based on ETFs then automatically monitors and rebalances the portfolio for clients.

Stockspot founder and CEO Chris Brycki told Stockhead ChatGPT will have an interesting future but he doesnt expect the AI tool to replace human financial planners anytime soon.

“In terms of competition, I think it will compete against Reddit and other places where people would seek general financial answers,” he said.

“It is able to find a lot of information and collate that information very efficiently – when it is correct.”

He said for example, it can provide simple explanations to questions like ‘What is an ETF?’ or ‘What is financial planning?’

“For some professionals, like advice practitioners, it may make their jobs and daily tasks a lot more efficient,” Brycki said.

“It could actually assist them with routine work like producing statements of advice, which would then free up their time to spend with their clients.”

However, he said ChatGPT can’t, at this stage, take complex personal circumstances into account.

“Say you wanted tax planning, estate planning and ETF investment advice, the responses it generates are likely to be shallow and lacking in depth and insight,” he said.

Brycki said another limitation is its knowledge is not always up to date.

He said for example, when you ask ChatGPT about the outlook for bond ETFs in Australia, its knowledge is limited to 2021 and it says: “My knowledge cut off is 2021, so I cannot provide up-to-date information on the current market.”

“Much to the dismay of every trader, ChatGPT also doesn’t have any predictive ability so, it won’t be able to tell you which investments will outperform and that long-desired Alpha will remain elusive,” Brycki said.


Humans needed to manage behaviour

Deakin University behavioural finance academic and Morningstar analyst Erica Hall said already investors can obtain a vast amount information online, and ChatGPT can potentially provide even more granular information.

However, Hall said the value add advisers provide is in managing human behaviours.

“Advisers coach investors through their emotions to stay the course,” she said.

“When markets get choppy and the temptation is to throw in the towel the adviser can act as a circuit breaker and be the voice of reason, while ChatGPT can’t do that.

“Advisers can consider the specifics of a person’s situation, and also by asking the right questions identify issues that the investor may not have even thought about whereas ChatGPT is only as good as the questions you ask it.”

She said while ChatGPT is an exciting development that may be able to enhance the advice process, it does fall short when it comes to managing human behaviours and that’s a key element of good financial advice.

“Ultimately I can see there is a role for both and AI (like ChatGPT) can make the advice process more efficient and hopefully cheaper, but also the human element of advice in offering behavioural coaching is very important,” she said.

“There is no point in having a great financial plan if it isn’t properly implemented and that’s where the adviser makes all the difference.”

Financial Planning Association of Australia CEO Sarah Abood told Stockhead  ChatGPT probably has the potential over time to do a lot of the tasks, particularly the more routine administration and paperwork of financial planners.

“However that’s realistically several years away and the more sophisticated judgement and ethical decision making further still,” she said.

“The other issue is consumers’ readiness to accept advice in that way.”


How does ChatGPT see its role in offering financial advice?

We asked ChatGPT where its sees its role in providing financial advice, specifically posing the question: ‘Will ChatGPT replace financial advisors?’. Sadly, it replied that financial advisors still have a role to play in providing personalised advice.



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The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.