Will AI win the race to deliver cheap financial advice?

We know jobs in every white-collar industry are threatened by AI – even Microsoft’s Copilot will confirm this brutal reality if you ask it nicely (these bots are now voice activated, so you don’t even have to type out your questions).

But it’s inside the investment sector, where people get paid well often because they simply know a little more than you do, where cosy certainties of the past are suddenly under siege.

Financial advisers need to get ahead of AI before the ‘bots’ leave them so far behind they will be made redundant.

This existential threat is probably why a new survey this week shows that 74 per cent of Australian advisers use AI tools – against 64 per cent among their global counterparts.

The numbers come from the highly regarded Adviser Ratings group, which produces an annual benchmark report for the industry.

And, let’s be clear, it’s not that Australian financial advisers are world famous as early adopters of new technology. Rather, it’s the fact that in an industry where the job numbers have halved in a decade, harnessing AI is not a choice. It’s a necessity.

“Australian advisers are under so much margin pressure, they have to move,” says

Adviser Ratings managing director Angus Woods.

“It’s become a very competitive sector.”

The threat of “digital advice” has hung over the Australian investment industry for a decade. Start-ups have come and gone as each iteration of digital finance technology promised more than it delivered. But this year, with the arrival of fully fledged AI bots typified by ChatGPT 5, the threat is fully realised.

Just as an exercise this week, I asked 20 questions on Microsoft Copilot about investing.

The questions ranged from elementary queries such as what is an exchange-traded fund to localised oddities such as how much can you put into concession-taxed super each year (allowing for the super guarantee charge).

The AI bot got every single question correct. The only flaw was that its answers were sometimes out of date. (Super rules never stop changing, perhaps that offers hope for the 15,000 real-life human financial planners left in the sector.)

Financial advisers will say that what we need in the future is financial advisers “holding the hand” of AI-informed investors, where both parties can aspire to a more advanced relationship.

But that’s not going to happen very often, unless it’s at the top end.

Just like the adoption of every other technology wave from the PC to the arrival of internet there are already early winners and losers as chipmakers such as Nvidia soar on the sharemarket and former market darlings like Adobe get sold off quickly.

But the enduring winner across the investment and advice sector will most likely be the incumbents who get their AI use optimised long before the wider reality of this computing power comes to pass.

If you were to make an early bet on which Australian organisation looks set to wipe the floor with the competition on AI, take a look at CBA.

Here’s three related developments at the nation’s biggest bank this year that tell a much broader story.

Earlier this year CBA cut dozens of jobs across its call centre operations after rolling out an AI chatbot to deal with customer inquiries.

Then this week, announcing its $10.3bn annual profit, the bank offered some – but not too much – detail on a major deal it signed with the elite technology operation OpenAI, led by Sam Altman. Ostensibly, this deal will handle urgent tasks such as scams and fraud along with a very widely defined brief to improve customers services.

But it just so happens that CBA has also recently become the first major bank to venture back into the wealth management business since the royal commission almost a decade ago.

The move is happening through a new unit called CBA Private.

The venture will concentrate on the nation’s bulging population of so-called wholesale investors.

With the Australian market characterised by a shrinking number of financial planners and a huge lift in private wealth, AI-powered CBA has a huge opportunity here. No wonder CBA chief executive Matt Comyn says this year is “an inflection point” for AI and finance.

What’s next?

If you know the right questions to ask our AI bot, there is very little need any longer to waste your money getting financial advisers to answer fact-based questions.

Keep in mind that advisers must make more than $3000 a year off each customer to have a viable business.

At its very best, the extraordinary scale-up of capability in this area means that you should only need real-life advisers for specialised tax and asset allocation questions.

Will the AI bots win the race? Woods at Adviser Ratings says there will be two models emerging from the AI boom.

“At the top end of the market you will still have the human element but that will be for the relatively wealthy,” Woods says.

As for everyone else, he says someone will make a play on advice for the masses and he believes that will be the nation’s biggest bank.

“CBA is making a bet to position itself in this space and just now it’s ahead of the curve,” he says.

This article first appeared in The Australian as Will AI win the race to deliver cheap financial advice?