Artificial Intelligence In Financial Services: Convenience or Catastrophe?
Artificial intelligence is here whether you like it or not. Once you realize it could become a problem then you’ll also realize it’s too late. Whatever we have at our disposal as consumers is probably just the tip of the iceberg relative to what the tech companies and worldwide government agencies have. It’s going to get out of control, and why not? It has been the subject of several movies in the past and some leaders in the Tech industry have urged everyone else to slow the advancements.
The Rise of AI and Job Losses
Most people are familiar with the earliest form of AI that I can think of. Anyone use Siri? It’s the female voice on smart phones that can answer any question and give you directions to any address. Some people even have devices in their homes with Siri ready for service at any moment. Need a recipe for a perfect appetizer or cocktail, or are you dying to hear that one song that’s stuck in your head? Just ask Siri and you’ll have it right away.
Several major tech companies are using AI to automate business to improve efficiency and cut costs. Computers and robots don’t need health insurance or workman’s comp so the loss of jobs will save the companies a lot of money. This won’t be good for employment and only further reinforces my idea that the most powerful people in the world will continue to aggregate all the wealth.
Convenience comes at a cost and this one looks to be very expensive for the average individual.
Artificial Intelligence in Financial Services and Robo-Advisors
This brings me to my point about ai in financial services. For years the large brokerage companies have used robo-advisors that design and manage portfolios for clients.
The process is automated, objective and efficient with little to no subjective human intervention. It all comes back to whoever designed the software and created the algorithms so someone’s opinion is behind it.
If a large management firm gives you a computerized set of instructions for portfolio management, you will likely end up with a mix of investments that leans toward what’s best for the company. For example, if Edward Jones has a robo-advisor then it is likely to recommend Edward Jones sponsored mutual funds, ETFS and bond funds.
The Future of Financial Advising and AI
Because I have established myself as a contrarian in this industry, I think the automated process leaves something to be desired for most retirees. I have to think that my job is possibly in jeopardy as well.
As brokerage firms continue to warm up to the idea of using annuities, insurance companies may well go along with it just to gain a larger market share. Cost cutting is a popular thing in the modern world and I wouldn’t put it past any of them to replace agents with computers.
It already kind of works like this given it’s the general recommendations that seem to be the most popular. Now they are letting guys like me participate but that may not always be the case.
Suitability vs. Fiduciary Standard and AI
Time for a reminder of the difference between the suitability and fiduciary standard:
Suitability Standard- Finding a solution that is suitable for a client in regards to the unique variables of each person. This includes a broad range of options.
Fiduciary Standard- Finding a solution that is in the best interest of the client. This produces a very specific and limited option with greater overall benefit.
Will AI be able to come to a conclusion that fits the fiduciary standard? I’m not so sure it’s possible without human interaction.
The Unsettling Reality of AI in Content Creation
I bring this up because we’ve played with it on my website. It’s possible for AI to create long-form content in seconds, as opposed to me spending a few hours developing an idea. It’s not the same but the search engine algorithms don’t seem to penalize its use. I suspect that a lot of other internet content is being created using technology like ChatGPT.
You are likely already getting opposing information and recommendations based on content generated by AI. It will become more and more ubiquitous as time goes by and definitely sooner rather than later.
You have to decide whether that’s what you want.
The creepiest thing I’ve seen so far is when we had an AI program recreate my voice.
For anyone who doesn’t know, Jeremy is the guy who runs my marketing and advertising programs. He’s the reason most of you found me and we spend a lot of time creating content based on your questions and the case studies I share frequently.
Jeremy gave the AI system the command to listen to a few seconds of my podcast and then create an audio recording of my voice reading a portion of one of my newsletters. Almost instantly it came back with an audio clip about 90 seconds long. It sounded like my voice reading my writing with a 90% match that was barely different from my real voice. A little more training for the system and no one would be able to tell the difference.
A Commitment to Authenticity
I don’t like the idea of a computer having any control over the content I post or the recommendations I make. Today I’m making a promise to everyone that Annuity Straight Talk will always remain a purely authentic product of my own creation.
If one day that makes me outdated and uncompetitive in comparison to computer-generated advisors then so be it. If you get in before that happens then you’ll always have me in your corner. If you think that’s far fetched then consider that I’ve heard from several people that a handful of hometown banks and credit unions have converted to fully automated tellers.
Authenticity vs. AI In Financial Services
I have a strong suspicion, bordering on confirmation, that there are some competitors in the annuity market that already use artificial intelligence to create content very quickly. It’s not their own thoughts or years of work, rather it’s a computer taking a series of commands and finishing the job in a few seconds.
This website has been a work in progress for nearly 15 years but it could be copied by artificial intelligence in a flash. I’ll fight like hell to keep ownership of what I’ve created and you need to understand that it works for your benefit as well.
The Choice Between AI and Human Expertise
If you’d rather work with a robot then leave now and go get your information elsewhere. For anyone else who is ok with the human brain and a beating heart, I intend to make sure this is the last place to fall.
Enjoy your weekend!