“They are trying to personalise their recommendations or their advice. You can talk to your money and ask it to take actions on your behalf.”
Akahu sits behind many of the apps New Zealanders use to track spending, budgeting and investments, connecting bank data to third-party platforms, so they’re seeing it happen in real time.
First social media came for my job – now AI? But not so fast.
Financial advice in New Zealand is a regulated activity – you can’t just dish it out at a barbecue.
Providers must be licensed by the Financial Markets Authority (FMA), advisers must be qualified and on the financial services register. (I can’t even call myself a financial adviser at the moment, given I’m not currently employed by a licensed provider).
An adviser must act with integrity, provide advice that is fit for purpose and ensure the client understands the advice.
Can AI really live up to all that? Who is responsible when AI gets it wrong?
The FMA told me in an email this week that financial advice is “when a person makes a recommendation or opinion about a financial advice product”.
Given that AI is – famously – not a person, but is increasingly giving recommendations and opinions, is our regulatory system ready for what’s coming, or indeed is already here?
Interestingly, everyone from regulators to advice firms and industry bodies had many positive things to say about AI in financial advice – it isn’t just a doomsday “everyone will lose their jobs” story. It could make financial advice more accessible – and we need that.
FMA research on accessibility of advice found only 28% of New Zealanders accessed financial advice in the past year, despite 63% thinking about their finances weekly.
It’s not hard to imagine people trusting AI to advise them on big financial decisions given many already use it as a counsellor, (or even as a love interest).
It could also remove the inertia that keeps people stuck in poor financial products simply because changing providers is time-consuming and/or confusing.
Financial Advice NZ provides training courses to help firms embed AI into their advice businesses – because the shift has already started, behind the scenes.
Lighthouse Financial is utilising AI for admin functions currently and told me financial plans – which used to take four hours to write – are now produced much faster.
But is that just one step away from removing humans from the equation altogether?
“If you’re an adviser who just takes orders from clients … you’re in trouble,” head of wealth James Blair says. “Money is simple; people are complicated. If you’re a financial adviser who aligns people’s lives and goals with their money, you’ll be fine.”
Financial Advice NZ is singing from the same hymn sheet there: “Advice, at its core, is about helping people through the decisions that matter most,” chief executive Nick Hakes says, “that part is not going anywhere.”
But what happens if AI gets it wrong?
Hakes says we should not ignore the potential for consumer harm – on a mass scale.
“As many of us already know, AI generates financial information that could be incorrect and hallucinogenic. We don’t accept that as an outcome for licensed financial advice.”
So, where does the buck stop when it does? Will consumers be hitting up Sam Altman at OpenAI when ChatGPT recommendations create real financial harm?
Well, yeah – kinda.
James Blair says, “If tools like Gemini or ChatGPT are providing recommendations, they are effectively acting as a financial advice provider and should be regulated accordingly.”
The FMA’s head of financial advice, Romil Ghelani, confirmed that: “The regulatory framework for financial advice is technology neutral. The provider of the service is responsible for ensuring the recommendation is appropriate/fit for purpose.”
If it’s a local firm utilising AI to make financial recommendations and they get it wrong, who the responsible party is seems straightforward enough.
But when it’s a giant global, tech firm that consumers are engaging with directly, that feels implausible – akin to asking Meta to take responsibility for well … anything.
Whether we need new regulation to prevent that is a tricky one.
The FMA says it is pro-innovation, but also acknowledges that as AI becomes more pervasive, “it may accentuate existing risks or introduce new risks that are less well understood and harder to mitigate”.
I take that to mean we don’t yet know what we don’t know – and how can you regulate that?
Grasping the benefits of AI while ensuring Kiwis are protected from harm without stifling that innovation leaves them walking a tightrope.
So, do I need to do another dreaded career “pivot” before AI makes me irrelevant?
Hakes says it’s “an incredibly exciting time” to be in the industry, as the untapped demand for advice has never been greater.
So, possibly not. Or at least – not yet.
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