To put ‘financial wellbeing’ and ‘AI’ in the same sentence may seem a little strange to some. Many might see them as polar opposites.
It won’t come as news to anyone though that the financial services industry has been living in the shadow of artificial intelligence (AI) for years. Likely for longer than we think.
AI is present in everything from our LinkedIn posts, to our email auto-fill (you know, when it saves you from sending your boss those embarrassing typos...). It’s not just a fancy tool – it’s everywhere, all-encompassing and quietly revolutionary.
But what about AI’s role in financial wellbeing? Can it be used for good, or are robots really going to take over our customers’ headspace? This article explores the ever-evolving relationship between financial wellbeing and AI – and why it matters.
What is financial wellbeing?
Money and mindset are intrinsically interlinked. When we talk about financial wellbeing, we mean how confident and in control people (in this case, your clients) feel about their finances – both today, and tomorrow.
It’s about having a good enough relationship with money that you’re able to spend joyfully in the now, but embrace long-term savings goals for a financially ‘well’ future.
Financial wellbeing can mean different things to different clients. For some, it might mean saving into an ‘emergency fund’ to cover unexpected costs (like the car breaking down), all while budgeting for a weekly takeaway. For others, it might mean having ‘money goals’ to save for an annual holiday, while paying into a separate savings account for retirement.
Ultimately, it’s about living in the present, while being able to confidently financially plan for our future selves.
Building trust with your clients
For advisers, financial wellbeing could be a key part of your offering. You could encourage your clients to look beyond their basic money needs today, and help them focus on their life goals for tomorrow. Help them plan to pay the bills, all while going for their dream holiday.
By adopting a more wellbeing-led approach to their finances, it could mean that your clients not only feel more confident in the retirement lifestyle ahead of them, but more satisfied with the life they’ve led so far, too.
Getting to know them on a deeper level and putting their best interests at the heart of your relationship could also mean that they trust you more.
Our 2023 financial wellbeing research showed that only 25% of people have a clear picture of their future selves – revealing a real opportunity for advisers.1 By helping clients get a better handle on their personal and financial goals, advisers can not only strengthen client relationships – but stand out in their field.
So, where does AI come into it?
In a world where ‘unprecedented times’ are seemingly fast becoming the norm, financial challenges and stresses are natural. But for some, keeping on top of finances is overwhelming.
For clients, AI could help relieve some of that overwhelm by putting financial jargon into ‘everyday’ language. Programmes like ChatGPT could demystify financial speak, helping build financial knowledge, literacy, and confidence. Free tools could enlighten clients on financial basics in a language style that suits them. In turn, they might feel more positive or motivated to ask advisers for help, or for specific advice.
When it comes to smart money management, customers no longer need to rush to the bank before it closes. Budgeting apps are in no short supply – but how far could AI enhance them?
Artificially intelligent methods of banking and saving could increase personalisation and instant accessibility for clients – building both financial resilience and capability. Apps could identify patterns of behaviour in spending or investing, continuously learn from them, and suggest personalised financial advice through reactive chatbots.
Equally, they could identify scams or fraudulent behaviour – as well as immediately flag if a customer is vulnerable, based on their activity. By digitising and automating menial financial tasks or basic money goals, advisers could focus on more strategic parts of their role.
AI could help reframe your clients’ mindset about money. It could help them feel more in tune with their finances – and ultimately in control of their life goals for both today and tomorrow.
Potential pitfalls: AI as a ‘foe’ to financial wellbeing
Of course, there's two sides to every story. One risk of AI becoming increasingly involved in the financial advice conversation is an over-reliance on technology. The belief that we have all the right answers at our fingertips could lead to overlooking the need for human intervention.
With dependence comes complacency in fact-checking, and clients may feel they don’t need to ask for an adviser’s opinion if they’ve asked AI first.
While there’s so much potential with AI, a lot is left to iron out. There’s ethical concerns around privacy, data security, and biases present in algorithms to navigate – as well as its ability to make scams more sophisticated. Ensuring privacy and data security becomes more paramount than ever – as well as the potential risk to your clients.
An over-reliance on AI in the financial advice sector could leave many professionals in the industry vulnerable. As AI systems become more capable of performing tasks usually handled by advisers, the need for traditional advice could diminish.
It’s important to gently remind your clients that human touch is key – and that your wealth of experience can help validate (or deny) any AI outputs.
Addressing these concerns proactively is essential to make sure that we harness AI's potential responsibly and equitably, making it work in the best interests of both advisers, and customers. Read our article, ‘How will AI impact financial advice’, on how a collaborative approach with AI could lead to an exciting future.
Continuous learning
A balanced, hybrid model between AI tools and real-life human expertise is key. Clients deserve the clear, accessible financial education that AI can freely reward them – but they need personalised, trustworthy and reliable human interaction, too. Interaction with advisers that have their interests at heart – both for spending joyfully today, and saving for tomorrow.
The importance of advisers to upskill and stay informed about both AI and financial wellbeing has never been greater. AI presents both capabilities and limitations, but it’s here – and it’s not disappearing. We’ve written an article on how your marketing strategy can keep up with a rapidly changing world if you’d like to know more.
Shifting money mindsets
Limited financial education and a taboo-like attitude towards money could hinder a client’s financial wellbeing – meaning that their future isn’t considered in the present. AI could help change these arguably inherent financial attitudes, and positive financial behaviour could lead to a life free of financial stress.
But, could it come at the expense of the human touch? Or, will an adviser seen to be on top of today’s trends be good for practice? By engaging with AI and financial wellbeing both thoughtfully and proactively, advisers can strive to stay relevant in an increasingly tech-driven world. Find out how to, and more, by visiting our Money:Mindshift hub.
Ultimately, it’s the responsibility of advisers to help clients become in tune with their money emotions by reframing their mindset towards finances – and AI could play a part in that. Hopefully for the better.
- Improve your financial wellbeing. Aegon financial wellbeing research conducted with 10,040 UK residents. The research was carried out online by Aegon’s Centre for Behavioural Research in July and August 2023.