Most Investors Comfortable Using AI For Investment Advice – Avaloq

Amanda Cheesley Deputy Editor 2 November 2023

Most Investors Comfortable Using AI For Investment Advice – Avaloq

This week, Avaloq, a specialist in digital banking solutions and wealth management technology, released a survey of 3,000 investors aged 18, over six European and Asian markets, on the use of artificial intelligence (AI) for investment advice.

With the UK government’s AI safety summit taking place with week, new research from Avaloq reveals that the majority of investors are comfortable with AI being used for investing.

However, the survey found that investors prefer a blended approach with human involvement rather than full delegation to AI, highlighting the opportunity for wealth managers to integrate AI into the services they provide.

Findings come as UK Prime Minister Rishi Sunak is hosting a two-day AI Safety Summit at Bletchley Park, bringing together nations from around the world to discuss the opportunities and risks posed by AI and how those risks can be mitigated. Participants include Elon Musk, the ChatGPT boss, as well as US Vice-President Kamala Harris, EU Commission President Ursula von der Leyen and Wu Zhaohui, Chinese vice minister of science and tech, amongst others.

The survey also comes after US President Joe Biden signed a new AI executive order on Monday that directs new government-wide federal standards and policies for the responsible development and use of this emerging technology. The US is moving on technology at a time when policymakers around the world are trying to work out how far to regulate it and protect competition and innovation. See more here. 

Avaloq’s survey shows that the majority of UK investors are comfortable with AI being used in the investing. That includes more than two thirds (69 per cent) of investors who would accept AI support in providing investment advice. The study was conducted among 500 UK investors. 

Avaloq also surveyed a further 2,500 investors from five additional markets in Europe and Asia and found that they are more receptive to the use of AI than investors based in the UK. The global average for those willing to use AI for some or all of their approach to financial tasks (74 per cent) was higher than the corresponding score for the UK (69 per cent), the study reveals. UK investors are also less likely to cede control to AI; across the different use cases, 22 per cent of global investors would accept an approach fully driven by AI, compared with 18 per cent in the UK. 

“Our research reveals that investors are more open to using AI in the investment process but still want the human touch, indicating natural opportunities for wealth managers to integrate AI into their offerings in a way that augments the service they provide,” Gery Zollinger, head of data science at Avaloq, said. 

“Scepticism over full delegation to AI and the issues that will be highlighted at this week’s AI Safety Summit offer pause for concern and highlight the importance of the financial sector fully understanding the risks associated with AI – as well as the need for effective regulation to ensure that AI does not compromise investor safety,” Zollinger added.

“It is vital that financial services firms using AI have a robust monitoring framework in place to identify and rectify any potential shortcomings, including unethical outcomes,” he continued.

The findings have been echoed by other financial institutions. Eoin Lane, global head of AI at BNY Mellon, sees AI as complementing the wealth manager's role, rather than replacing it, helping them to become more efficient. See more here. Benefits of AI range from automating repetitive tasks, providing data-driven advice in specific areas such as portfolio optimisation, risk management and tax analysis.

Annabelle Bryde, managing director and head of UK Private Bank and Crown Dependencies at Barclays Private Bank, also thinks that that AI will play an important role in wealth management. But she believes that AI must be regulated, and this should start sooner rather than later. See more here

The survey was carried out in February and March 2023, with 57 per cent of respondents being mass-affluent, with investable assets of $250,000 to $1 million, while 37 per cent fell within the high net worth (HNW) segment, with investable assets of $1 million to $50 million and 6 per cent within the UHNW bracket, with investable assets above $50 million.

Avaloq clients include private banks, wealth managers and investment managers, as well as retail and neo banks, who develop software that can be deployed flexibly through cloud-based Software as a Service (SaaS) or on-premises.

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