Benchmark Capital’s managing director of wealth, Ed Dymott, said artificial intelligence products aimed at the advice profession could begin to launch as early as this year.
Speaking to FT Adviser, Dymott said advice artificial intelligence products could start being introduced as there has not yet been a commercial application using the new AI tools.
“The common use case currently is a firm typing simple questions into the Chat-GPT app,” he said.
“I therefore think that [this] year we will see the first launch of commercial applications for advisers using this next generation AI tools.”
He added: “2023 was officially the Chinese year of the rabbit, but given the number of artificial intelligence debates, it should really have been the Year of the Robot.
“While ChatGPT was officially launched in November 2022 – it seems that last year was the one for most financial planners to have started to understand what it means for our industry."
Dymott explained that half the market thinks AI could be the demise of the industry as someone simply needs to ask a chat-bot what to do with their finances.
However the other half feel it could be the platform to transform productivity.
He also predicted that the industry could see the next wave of consolidation this year.
“You can’t escape an advice firm announcing yet another acquisition (probably including my own), but with the interest rate environment, looming tax changes and a number of consolidators still sitting on dry powder, [2024] will be the most interesting,” he said.
“I can see at least two or three of the larger consolidators seeking an exit or at least new funding.”
However, with regulatory pressures requiring firms not only to do more but to hold more capital, firms could seek alternative models.
Consumer duty
Last year was the year of consumer duty which set the next benchmark for financial services, with Dymott arguing that it is already having effect.
Dymott said: “Given the consumer duty arrived in July, and then just in October you had key industry players changing their fee structures and then reviewing their pricing – all in the name of consumer duty, you could say the FCA has started to get the outcomes they were expecting.
“Since then, we have had a flurry of Dear CEO letters setting expectations of what the regulator expects in a new post-consumer duty world.”
On the back of this, Dymott said 2024 could be another challenging year for providers.
He explained the lack of integration and overall service levels from parts of the platform and provider market are having an impact.
Additionally, scrutiny over interest rate margins, plus the next wave of consumer duty impacting the legacy products most of these providers generate profits from, points to another challenging year for some providers.
“The gap between the winners and losers will increase and I see yet more legacy assets being shifted towards more modern, lower cost, high quality service models,” he said.
