LAS VEGAS-AI-based financial advice is going to change everything—and that includes with underserved populations--according to numerous experts with firms looking to do just that and offering their forecasts during the Money 2020 conference here.
Among those sharing that viewpoint was Jessica Chen Riolfi, co-founder and CEO of Uprise, who has previously held roles with JPMorgan, eBay and Robinhood, among other firms. Riolfi’s comments came as part of a morning long track of presentations on machine learning and AI.
When it comes to incorporating AI into financial advisory services, Riolfi believes “we are on the cusp of something big.”
In the case of Uprise, which says it empowers companies to embed human+AI-powered financial advisory into their offerings, Riolfi said she and the company area also working on bringing more transparency to taboo money topics that she believes in, as well.
The ’BS Response’
“How many of you have heard or have received a response that goes something like this: ‘I'm sorry I can't help you, please consult your financial advisor’?” Riolfi asked. “Everybody has. The thing is that everybody knows that that response is total BS, right? Customers know it's BS, the company knows it's BS. If (the customer) had a financial advisor, they wouldn't be asking the company. What my cofounders and I realized is that this is a huge missed opportunity, so this is what we're building--human and AI-powered financial advisory as a service.”
Riolfi said she became “obsessed” with related questions and spoke with numerous financial advisors in traditional advisory role, calling them “incredibly helpful and mission driven.”
The Fundamental Question
The fundamental question any consumer has in financial advisory services, said Riolfi, is “are you going to make me richer than if I didn't work with you?”
It’s a question, she said, and that is actually really hard to quantify “because advisors don't know the counterfactual--they can't be like here are all the silly things that you would have done if you didn't come work with them.”
Riolfi shared with her audience one research paper that surveyed 4,000 different working households to determine whether or not having a financial advisor had any impact on outcomes and, specifically, on one metric, which was retirement income replacement.
The Key Finding
After controlling for numerous factors and using multiple methodologies, the research found that having a financial plan represents 70% of the total impact.
“It helps people have more financial confidence to know what they need to do and then also to know how to do the things they need to do,” Riolfi explained.
Taking that out one step further, Riolfi said there are 1.4-billion people on the planet, or 20% of the world’s population, who are underbanked. When asked what is holding them back, 64% said they could not use an account at a financial institution without help, and that was across all populations.
AI, said Riolfi, can help fill that void.
‘Incredibly Daunting’
“Financial products are incredibly daunting, they're really hard to navigate. People need help,” she said. “We need to get people more help. There is a lot of data that supports the fact that when people are more included in the financial system, when they use financial products, a lot of good things happen.”
And that goes beyond just improved personal finances, with the research showing increased financial participation improves:
- Political participation
- Crime reduction
- Fraud reduction
- Female workplace participation’
- Gender equality and independence
- Increased crop yields
The New Frontier
AI can expand access and cut costs related to financial advisory services, Riolfi told the meeting, calling it a “new efficient frontier.”
Riolfi said Uprise spends the majority of its time building recommendation engines to produce financial plans that are as good as the human would have made. And it can do so in under 20 minutes, she said.
For example, AI is improving access to and costs for financial advice by using the advisor’s voice to communicate with clients both verbally and in writing and can be tailored to the individual client with ease, Riolfi said.
“When you pair AI with live data feeds, now all of a sudden you are able to detect things that are going to change the client situation and then be able to remind the advisor is going to be there for them and help them get on top of that,” she added.
The $1 Goal
From the technology side providers are still far from the goal of driving costs down to $1 or less per advisory session, she said, but the closer costs reach that threshold the more services can be provided to underbanked markets, according to Riolfi.
The Promise
“You have to work with people from all walks of life and then commit to sharing as much as we can in order to make this happen, in order to train the ultimate financial advisor that can do this for a dollar or less,” Riolfi said. “The promise of this is that the financial advisor becomes ubiquitous.”
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