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Humans still trump bots when it comes to financial planning

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Industry reservations over machine-generated advice still run deep, with many pointing out humans retain an edge over algorithms when it comes to financial planning, according to submissions received by the corporate regulator.

The Australian Securities and Investments Commission (ASIC) says many respondents to its consultation on promoting access to affordable advice do not provide digital advice services.

Of the 183 respondents who answered questions about digital personal advice, 134 say they did not want to offer it in future. Several of them cited development costs, lack of demand and consumer preference for a human adviser as key factors.

“Respondents were of the view that human advisers are required for complex advice needs,” ASIC says. “Many respondents also considered that digital advice is not conducive to building long-term relationships with clients.”

ASIC says respondents also expressed concerns over the “quality” of digital advice and that clients can receive poor advice if input information is provided incorrectly.

“Algorithms are not advanced enough to address the interaction of multiple advice needs and take a limited view of a client’s solution,” the regulator says.

“Respondents also noted that existing technologies often ‘promise a lot’ but in practice do not integrate data well and do not allow for adequately tailored advice and strategies.”

ASIC provided the answers to questions it took on notice during a Parliamentary Joint Committee on Corporations and Financial Services hearing last month.

Despite the reservations, respondents see a role for digital advice support services such as better document management systems and fact finding. Many say digital advice is only suited for simple planning needs and younger people.