In this episode, host Rob Pyne is joined by Nick Downey and Sam Patterson from Direct Wealth to explore how artificial intelligence (AI) is transforming financial planning. As industry leaders pushing the boundaries of AI adoption, Nick and Sam share their insights on how AI enhances efficiency, scales advice delivery, and enables more personalised client interactions.
The conversation covers AI’s potential to streamline workflows, reduce inefficiencies, and empower financial advisers to focus on strategy and relationships rather than administrative tasks. They also discuss the challenges of AI adoption, the importance of regulatory frameworks, and the mindset shift required to embrace new technology. Whether you’re an adviser, business owner, or simply curious about how AI is shaping the industry, this episode offers valuable perspectives on the future of financial planning.
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SHOW NOTES
The current state of AI in financial planning:
- Understanding where AI adoption stands today and its parallels with the early days of the internet.
- Insights into how AI is beginning to reshape the financial advice landscape.
Personalisation at scale:
- How AI can help financial planners offer highly tailored advice to more clients.
- The concept of “augmenting” advisers rather than replacing them.
Efficiency gains through AI:
- Automating repetitive tasks like file notes, application forms, and client data analysis.
- Streamlining processes to free advisers to focus on strategy and relationship-building.
Barriers to AI adoption in financial advice:
- Regulatory challenges and the need for ethical AI usage policies.
- Overcoming resistance to change and addressing fears about new technology.
Future vision for AI in financial advice:
- A bold vision of AI taking over data analysis and advice generation, leaving advisers to focus on strategy.
- The role of open banking, data feeds, and large language models in transforming client engagement.
Practical advice for financial planning businesses:
- Why businesses need an AI strategy rather than piecemeal solutions.
- Starting with process optimisation before layering in AI technology.
Quotes
- AI is here to augment, not replace. It elevates advisers to perform better and serve clients more effectively. – Nick Downey
- Personalisation at scale is the holy grail of financial advice, and AI can get us there faster than we ever imagined. – Sam Patterson
TRANSCRIPT
Welcome to The Trusted Adviser Podcast where you get a deep dive into the world of financial planning with industry leaders who share their stories of winning and learning as they charted their path to success. This podcast is for the curious, those of you that like to dig into the big half that sounds like you get ready to listen and learn.
Rob Pyne:
Welcome to the Trusted Adviser podcast. In today’s episode, I’m thrilled to have Nick Downey and Sam Patterson from Direct Wealth. Join me for an insightful discussion. We’ll explore one of the most transformative forces in business and financial planning today. Artificial intelligence, Nick and Sam bring a wealth of experience and cutting-edge insights into how AI is shaping advice delivery, enhancing personalization at scale, and driving efficiency across the financial planning landscape from the potential of AI in scaling advice businesses to its impact on client relationships. This conversation promises to shed light on the future of financial advice. Let’s dive in.
Welcome Nick Downey and Sam Patterson to the Trusted Adviser podcast.
So guys, there’s no bigger talking point in the world right now than artificial intelligence, let alone in the water financial planning, but I know you guys have been going deep on AI and I’m really looking forward to having this chat with you today because I’ve been spending my Christmas holidays reading and listening and learning as much as I can about it, but you guys are way ahead of where I’m at, so I’m very keen to hear what your understanding of it is and how you think it’ll apply in the world of financial planning. So I’ll start by saying the Google CEOS pitch the other day said, AI is one of the most important things humanity is working on. It is more profound than, I don’t know, electricity or fire. So that’s a pretty big statement to make, but that’s a pretty intelligent individual making a profound statement about the potential impact of AI. So drilling down to the world of financial planning, which is interesting to both you and to us, what do you think is the biggest potential for AI in the context of financial planning?
Nick Downey:
I think in terms of the potential of AI for financial advice, we’re obviously at that very early stage ai. There was no podcast about chat GBT or any of the large. Those were terms probably three years ago that only a very few selected people actually knew what it meant, and that was in a very niche, specialised kind of spot. Whereas you kind of look at it now and it’s like it’s everywhere. And I think we kind of just at that early step of widespread adoption, and Sam and I were actually just talking about this morning, it’s kind of similar to the thoughts of when the internet first came out, right? It’s like we kind of started with dial up and remember you had to make sure no one’s on the phone or you sitting there and it kind of feels like we’re at that spot.
So to answer the question in terms of what’s the potential, I think we’re really at the moment just scratching the surface. We’re not even crawling yet in that kind of walk run type analogy, but I think where it’s starting to look like and where the efficiencies are starting to go, okay, yeah, I can see the application of where it’s going to potentially help advice and obviously clients quite substantially is really, in my opinion, I guess with Sam, let him have a chat that it’s opening up that scale for advice businesses to be able to answer, which is a massive problem for us at the moment is the supply and demand of advice. I think if you really disseminate that down, it’s like, well, advice businesses need to be more efficient in terms of how they operate to be able to provide more advice to more people.
I think that’s probably the first thing is actually allowing that scalability advice, but not having the cookie cutter type delivery mechanisms. Actually personalization at scale is probably one way of describing it. So yeah, I think that’s probably a bit of a silver bullet to a degree, but I certainly am a strong believer that that’s the potential of where AI is going to take us is actually opening up that ability to say, okay, well yeah, we need more advisors, but that’s going to take time. So to help advisors be better at what they do, that’s where I think AI has a massive potential
Sam Patterson:
For me is like we are currently accessing it at the moment. So it’s something that you’re like, Hey, I want to utilise ai. I’m going to go to chat GBT, I’m going to use Claude De and I, whatever your flavour is, co-pilot, and you’re going to go and say, Hey, I want you to do something. To me that’s like, this is the very first iteration, it’s just going to happen when it needs to happen. The biggest potential for it is to bake itself into the workflow so that it is constantly there. Constantly when you use these terms, vigilant watching, stuff like that, people start getting nervous, mate, if I had a small version of Sam following me around every day going, Hey dude, you’ve got this. You forgot this. Hey, don’t forget that my wife would, and Kelly, my wife, her life would be infinitely happier, right?
So I think there’s this probably some we’ll talk a bit more in depth later around the fear of what it has. Once you start understanding the benefits that it has and that it can be there to seamlessly ride shotgun with you, I think that personalization and scale, that’s the end result. I think that’s what all business owners, if you’re a business owner and they’re different to financial advisors, financial advisors typically want to deliver the best advice possible in the most effective way. Business owners, they want to do that, but they’ve also got things like paying the rent, keeping the lights on, paying staff. Those advisors want to be remunerated fairly and well, everyone does. So profitability has to be something that’s, look, it’s almost like it’s an ugly conversation to have, oh, you’re talking about profit. I’m like, well, that’s what makes our business successful and that’s how we’re able to continue servicing clients and hiring more people is through that.
So I think that AI has such a profound impact at every level throughout and all facets of the business, and I get that’s a very vague answer, but man, we could spend five hours just talking about what Nick said, personalization at scale. You could spend another three talking about how does it impact your data analysis, and you probably spend a week there. So I would suggest that they’re the biggest ways. It becomes an invisible thing that just happens and you don’t even know that it’s happening, but you well and truly realise that, Hey, how the hell did we do anything five years ago? I think that’s going to be a moment in the very near future.
Rob Pyne:
As Nick was saying there, it’s early stages still, and yet it’s pretty incredible already. What we’re seeing, and this was a common theme, listening to Sam Altman, the open AI, CEO say a very similar thing, don’t build on the current models. You need to kind of build it such that you can adapt quickly as the models get infinitely better than what they are today even, and that personalization at scale, the efficiencies you speak about to drive profitability in businesses, allowing them to serve more people, to hire more staff. So the potential for it obviously is very significant and you guys are obviously right at the front edge of looking at how it can be applied. So just going back to that for a second about OpenAI, you mentioned ChatGPT. One thing I noticed, and Sam and I, you and I spoke briefly when you’re over here in Perth just before Christmas about they’ve launched their reasoning models, Inver Commerce and the open AI’s oh one model says the way they describe it, it thinks before it answers
Basically producing a long internal chain of thought before responding to the user. In other words, doing something like lots of running internal queries, but in the process of answering just one query. So it’s kind of this, not just a very linear thing, but they’re actually answering a very complex question by giving it more time to reason. In the world of financial planning, how do you see the impact of these large language models like open AIs used for client communication and lateral language processing differing from in our world, what essentially is data-driven analysis, financial analysis, using maybe large quant models, which I’ve heard sandbox AQ talk about as well. So do you have a perspective on how those large quant models versus large language models will be applied in the world of financial planning?
Sam Patterson:
For me, it’s not an either or scenario, like quant models are going to be there to help you analyse data. The problem is though, you need a highly technical person to operate those, to build those. I’m not an idiot, but even then I get to a point where I’m like, I need some help and I’ve then got to go and find a contractor because it’s not a full-time role because to hire these people full-time, you’re talking hundreds of thousands of dollars for one salary. If you’re looking at pure data scientists and data analogue data analysts, yes, but then if you want to really understand what’s going on, you then want to go to a data scientist. Most businesses, our level, even at Direct Wealth, we’re approaching 20 million in turnover. We would not have the facilities to hire a full-time data scientist. Simon would politely tell me to stop smoking what I was smoking in the back room and get back to more meaningful work if I suggested that to.
So when do LLMs come in? LLMs are bringing language to data and data to language, meaning you can get non-technical people that know what they want. Hey, I want you to give me a weekly breakdown by paraplanner of all hours completed in the last quarter, and I want you to give me another comparison to the previous financial periods quarter. That is a very explicit statement. It’s clear what you want. Language models, eat that for breakfast and go, just point me at the data. So then you’ve got these quant models that in some way, shape or form can come a little redundant, but so long as you’ve got the data source there, they’re always going to be there for the big guys. So let’s take someone like a hub 24 CFS, like a very big fund manager or a big stock broking firm. They’re going to keep using large quant models because they’re going to have such massive volumes of data. Even though direct wealth is quite a big business, if you were to compare data, it would be an ant to an elephant. It’s still very small language models help you access those kind of things very quickly with non-technical people very cheaply.
Rob Pyne:
So clearly there’s huge potential there. And Nick, if you can perhaps point to this question is what barriers do you think you believe that are in the financial advice industry and what barriers do we face in adopting AI on a large scale, do you think?
Nick Downey:
Yeah, I think as per any technology, the first hurdle that we’ve got to get over is the regulatory changes. And so that’s obviously usually a bit of a lagger to say, okay, well as the new technology comes into an industry, it’s okay, well licensees or even ASIC and they need to adapt to the changes that have introduced. The issue that I think we see in this wave of technology that’s coming in is that it’s evolving so quickly. In my experience, I haven’t seen something so rapidly come just ChatGPT how many months did it take them to hit a hundred million users? It’s wild how quickly the adoption is, but then also how quickly it’s changing. Every couple of months there’s a new model. So I think that’s probably the first hurdle that we need to get over is to say, okay, well yeah, we have actually licensees will have AI policies put in place so that there’s guardrails that are adopted to make sure that there’s safe and ethical use of ai.
It is a bit of a beast to a degree in that beast in our landscape. It needs to be controlled because at the end of the day, the information that we’re capturing about clients is very sensitive and we need to make sure that we are protecting that information as much as possible, and by virtue of that is that we need to make sure that we’ve got the legislation and regulation put in place to make sure there is safe use and adoption of ai. So I think that’s the first thing. The other part is that should probably your point earlier, Rob, I tend to agree it is in terms of an evolution as important as the adoption of electricity. So there’s a huge change that comes with that and change is difficult. So I think that’s going to be the next thing is to say, okay, well practises need to go into this new wave or this new adoption with a very open mind to say, Hey, well how we operated previously is going to fundamentally change.
Sam Patterson:
Can I add to this?
Nick Downey:
Yeah, go.
Sam Patterson:
I’m a ritualistic person, so every morning I do the exact same thing and I love my routine, I love my rituals in the morning, it doesn’t matter where they are. If I break my rituals, I get frazzled until I build a new one. I would suggest that the trust and the understanding is one part, but getting people used to a new way of doing work and challenging how they do that work. Nick and I were having a conversation just the other day and I’m like, what value does a file note have to us? What does it have? And it’s like, well as me if I’m an advisor, absolutely none. I couldn’t care. I can go back and read this thing later on. I don’t need to. I talked to Simon in the car yesterday. I’m like, how many times have you ever been to court?
He’s like, never. I’m like, how many times have you picked up a phone to call someone? They said, this call is being recorded. You can decline if you want. How many times have you declined? Never. I said, how many times have you asked for the transcript? Never. We base a lot of our decisions on fear. I don’t want the transcript held, so we’re having this conversation at Direct Wealth. Do we keep the transcript at the end or do we just want a summary? And I’m like, well, if you keep the transcript, the file note which no one likes and wants to do becomes irrelevant because I can talk to that. I can go back to it later on and say, Hey, this came up from a compliance audit. Can you give me some information? Tell me how this transpired. And instead of reading a file note that it has the risk of being highly tailored after the fact that doesn’t quite represent what happened in the meeting.
In some instances, you can just get this snippet that says, Sam, this is what happened. This was how it was inferred from it, and you can challenge it. Okay, is that right or wrong? Actually, there’s just a different way that we are going to do business and we are going to work, and those that get on board with it are going to, I personally believe that’s why we’re doing it at Direct Wealth you’ll thrive those that want to fight that will maintain these old traditions and ritualistic habits and it’s going to be difficult to keep up with the guys that are like, man, I don’t really care. I just want to do what I need to do and get what I need to get and be able to go back to this thing at any given point in time and ask what I want from it.
Rob Pyne:
Because the pace of change, it’s just so rapid. As Nick was saying earlier there too, just change management is always an issue in any context because the pace of change is so fast. You’re getting people kind of grappling with what does it mean and getting a fear-based response because
The natural instinct is to status quo bias, not wanting to change because how do I deal with this new technology? I don’t know how to integrate that, but I was listening to something that talked about this point about the fear-based sort of response to ai. One of our kids is studying a communications degree at university, and I said, are they starting to actually allow you to incorporate AI into building your content? He said initially they were really resistant and looking for doing these searches to see if people were using AI and trying to squash it as being a bad way of going about it. But they very quickly pivoted and said, well, actually no, we need to help our students understand how to use it and leverage it. So pleasingly, the education institutions are starting to after probably the first 12 months of it thinking we now can’t have kids using AI to get their content now, trying to help them leverage the technology because that’s really the future and everyone can see this is not a fad, this is a wave of change that as you say is profound as electricity. So we can’t hide from it. We have to look for ways, stay curious, how do we embrace it and look for opportunities to leverage it. And so in that context, tell us what Direct Wealth is actually currently working on in the artificial intelligence space in your business.
Sam Patterson:
At a high level, there’s only two things that stop businesses from scaling, as I’m sure you are acutely aware of Rob, but some of our other listeners might not be money securing capital to continue to grow, particularly if you’re an acquisition model like us or your ability to do work. The amount of businesses that I worked with early on and 2 million seems to be the magic number, man, they get to 2 million in turnover and they just hit this hard nose, they hit the brick wall and they’re like, we can’t get past here. They’ve got the best intentions. That’s usually when my role becomes a discussion like, okay, we need someone that understands efficient. I don’t like the term efficient because you can efficiently do things wrong over and over again or you can be effective with your time, which usually means slowing down and taking your time and doing the job the first time.
So for me, we are going through direct wealth’s processes from start to finish, right from the initial engagement of a digital marketing programme where a lead comes in to not even, they have an SOA, they’re an ongoing client through us. They’re doing their progress reviews every year, and there’s a journey that is clearly able to be articulated to the client. How does AI throughout the breadth of the 8,000 steps, if you count it up, the amount of individual decisions and steps that get made out of a pretty vanilla super and risk, let’s just take mom and dad super and risk. This is what Direct wealth, we’re not a high net worth. People think because of our turnover we must have these big clients. We don’t. We’re very vanilla. We like to try and refer to ourselves as the Coca-Cola of financial advice. We want to see a lot of people we don’t charge through the roof average fees roughly between four to $5,000 and most of ’em are around that four and a half thousand dollars.
So it’s not about that. It’s about being able to see the volume of clients. AI obviously has a very large impact on removing the drudgery that no one wants do. I don’t really want to write down my thoughts. I’ve just had a phone call, why the hell am I hanging out the phone and then typing a note into xplan, which is what we all do because if they don’t, I ring ’em and say, Hey man, don’t swear an XPLAN plan. Why not? Why are we doing those steps? Are there simple client communications that can be handled with ai? Like a marketing lead comes in? We typically have these form fields. Who are you a midlife groove, young and starting now, we think of these fancy names to try and categorise people. AI allows someone to tell us in their own words who they are, what they are, and then AI can be given a list of criteria that says, this is probably what that person’s saying.
So you’re changing the communication from trying to put people into buckets, and this is just one very small example. I won’t go through the entire chain. I think the two biggest industries in ai, the number one, the number one will be companionship. It will why? It is staggeringly good at getting to know you, who you are and what you like. And when they know that, guess what they do? They can tell you the response that you want to hear of. It could be a bad thing. You could just be drinking your own Kool-Aid after a while. So you’ve got to be very mindful of that. But in a good context, a client feels like they talk to us in their language, they get a response in their language, we get it in the input that we need. I can take that into structured outputs and I can place that directly into database.
So that’s just one example. I won’t continue going through the chain again, we’d be here all day, but filling application forms, just the whole thing is can someone just concentrate on what they do best, which is for the advisor, seeing clients, managing relationships, hopefully devising strategy. And typically what they’re not great at is communicating that to everyone else. They’ve got it all up here, and anytime I’ve put a plan on hold, I’ll ring them and they’ve got the answer straight away and I’m like, God damnit man, why couldn’t you just write that down the piece of paper? If you’ve got a good AI that can do that for you, you can just have people executing to their strengths all the time. Now that’s an effective business.
Nick Downey:
Just to add a point in there in terms of our journey, because I’ve only just recently come into the direct wealth fold, so I’ve kind of been sitting on the technology side for the last 15 years, so have just recently come back into practise, which is a bit of a change for myself. But
Rob Pyne:
Nick just jump in there. You were with Iris and Morningstar? Yep.
Nick Downey:
Yeah, and Coin as well. So I’ve done the rounds,
Sam Patterson:
We judge him. He’s very judged.
Nick Downey:
Yeah, I guess the point that I was going to make there is that by coming into Direct Wealth and starting this journey in terms of, okay, Sam was alluding to Direct Wealth is a very aggressive firm in terms of its acquisition processes and kind of velocity. So it’s the fundamental problem there is to say, okay, well yeah, we were talking about before they’re going a hundred miles an hour at the moment, but how do you go 200 miles an hour? Because
Sam was saying that that 2 million block, it’s like, okay, we get to a point and you want to increase your velocity or increase your effectiveness. And I think the point that I was going to make there is that okay, people look and say, okay, you could recognise that AI has potential to help, and there’s a lot of low hanging fruit as people say, I start looking at using copilot or I start look at using things like file AI or Claris, and it’s like there’s all these individual systems and AI solutions that are out there, but when you take the next level down, it’s like, well, if you start exposing yourself into the AI world, you really need to, as Sam saying, you really need to take a step back and look at the bigger picture
And it say, okay, well what is my AI strategy? Not just, okay, I’ve got an individual problem and I’m fixing that problem with a bit of ai. So it’s an interesting experience. Okay, well yeah, having file notes summary, that’s going to help us a lot, but then if you untangle that a little bit, okay, well that now sits separate to xplan. I was talking about having integrations of xplan, but again, it’s not a seamless process. I definitely would advocate in terms of trying something just get your toes in the water. But certainly for us at Direct Wealth, what we’ve done is to say, okay, well let’s really take the time to look at the entire spectrum of the advice process and how we’re actually going to adopt an AI strategy that will provide us with that seamless experience. I’ve done plenty of presentations in my time over the years. Less is more when it comes to tech. You don’t want to get in a situation where just throwing all these different ais into your practise and you turn around and well, now I’ve actually just made this harder than it needs to be. Like, yeah, I’m solving an individual problem, but now I’ve got four different AI providers and they don’t all talk to my CRM and it becomes a bit of a mess. So yeah,
Sam Patterson:
I’d just like to add something for anyone that’s listening. To give a bit of context around Direct Wealth. We’re on our 37th acquisition in eight years. So I came on board in year five. I was the second business that got purchased by Simon. I was wanting to get out. I realised that I don’t like being an advisor. I was successful enough at it, but I didn’t like it. I preferred working on businesses, not in them. He bought the business. We went our separate ways and that’s obviously how I met you, Rob. And then we came back and he got to year five and he got to, funnily enough, two and a half million. He was like, Hey, I think I needed a general manager. I want someone to come in and systematise this. So in the last three years, because of my three year anniversaries in three days we’ve gone from two and a half million on one site with nine staff to 20 million.
In that three years we’ve also acquired, of those 37 businesses we’ve acquired over 20. So we’ve done half of that. Scaling was done in half of that time. So we use xplan. We Office 365 and I use SharePoint and that is it. We have no workflows or threads. We have no automation. We are driven purely off the calendar. The point that I’m trying to make is that process and people Trump technology every single day of the week. So ai, in my opinion, the best bit about it is it’s kind of people as well as technology. It sits in two of those camps. And to come back to what Nick was saying, take a very big step back and before you even look at talking about ai, look at your processes and look at how effective they are. And for business owners, that is directly correlated by your profit margin and tenure.
You can have high profit margin, but if you have high staff turnover, that means people, they don’t like working there. And I think anyone understands that that is a very difficult game to play and it’s unsustainable if you’ve got low profit, but people love working there, they’re probably sitting around the water bubbler talking about dog keeps barking at 3:00 AM and the baby that ran out in the road for two hours, right? No one wants to be in that camp either. So I would stress that before you go down any path, make sure you’ve got your fundamentals, your concrete base that you build, everything from rock solid. Make sure you know exactly what you’re doing and why, know who should be doing it. Be very unconflicted around that. Get that happening with as little tech as possible then, and we’re eight years into the game and now we’re sitting down going, okay, we can continue to scale as we are. We’ve proven that if you train your staff well and you have good accountability and capability, the sky’s the limit, but you obviously want to make the most profit as you can. So that’s when technology comes into play. Don’t start there. It’s a very bad outcome.
Rob Pyne:
So it speaks to that kind of concept about first principles is that it’s got to be that process process first. People and people are just being augmented by ai. So don’t try and just apply technology to a bad process.
Sam Patterson:
Exactly.
Rob Pyne:
Start with your process. Make sure you’re systematic in the way you deliver things At Direct Wealth. You’ve proven that what’s possible without AI has only been around really a couple of years and really probably being applied in the last year or so, but pre that AI experience with you guys at Direct Wealth, you’ve clearly been able to grow your business profoundly over the last eight years. And so the point is well made turning a locomotive into a bullet train, it takes changing the rails massive. You actually just trying to actually go faster on old processes, I should say.
Sam Patterson:
And we are a bullet train. I use that analogy. I’m like when someone wants to do something outside of the process, I’m like, you are basically standing on the side of the Shinjuku train line in Japan with your thumb out and we are going 500 miles an hour and you want me to hit the emergency brakes. People are breaking faces luggages everywhere. There’s people streets. Just so I can say, oh, where you go, mate. Sorry champ, I’m going to sail straight past you. I’m not going to give you a second thought.
Rob Pyne:
So can I just drill into some of the specific inefficiencies in the advice process that you’re aiming to address with your ai? Now, you mentioned their leads pre-qualifying, you mentioned their standardised communications file notes. Obviously everyone’s looking at file notes, these people using Claris and Perino and Otter even that isn’t specific to financial planning and fin talker, there’s a few around that are doing this specific financial planning file, noting application forms. So the implementation piece will obviously become relevant and certainly the providers out there will be thinking about AI just like we are, how to actually make their processes more efficient. So what specific inefficiencies at that very fundamental process level are you trying to address with AI directly in direct wealth?
Sam Patterson:
We are human and I’ve got a pretty good memory, but I still make mistakes, so I’ll still do something. I was a paraplanner. I have my own paraplanning business for a while. I did some of your work as well back then. I did a good plan, but my goal was to get to 95%, right? I would tell my clients, I’m like, I cannot get you to a hundred percent. You can’t look at a 60 page document from start to finish and capture everything with an old set of eyes. I’ve been working on this for four hours. If you want me to do that, I will need to double my price. Then I’ll print it off. I’ll have to go away from it for hours and come back and scan it and look word for word with a red pen. Clients that asked for that, I usually said, I don’t want to do your business because that’s not how I wanted to do business.
Where I see ai, the fundamental gap that it bridges is that element right there starting from a blank sheet of paper. It will give you something to start off with. The human can either confirm it, add to it, amend it, and then AI can check that again. It can go, Hey, I think that’s right, or maybe you made an error. And it is one AI that can do it for your entire business. So if you have the domain experience, now, this is the biggest thing that I find lacking in every single software provider that I’ve ever used. Most of these people have never been an advisor, Rob. They’ve not had a business your size. They’ve certainly not achieved the kind of efficiency or scale that I’ve done with a couple of different businesses and they’re going to sit across from me and say, Sam, you need this in your business.
I’m like, you are drunk, mate. None of that is of value to me whatsoever. And this is very controversial. You need a client portal. I’m like, I don’t need that at all. We have triple the industry average profit margin, triple. Now people can do some Googling and work out what that is, and we don’t have a client port. I don’t have the progress update report that HPH has, which is phenomenal. I would love it. Don’t get me wrong. I’m not saying these things I don’t want, what I’m saying is you need to have a very objective view of what actually shifts the needle. And most technology providers have zero idea zero because they’re people that started out as paraplanners or associates, maybe they dip their toe into advisory land, they’re probably not successful in it. So they said, well, this isn’t for me. I don’t like sales.
But then they’re going to go and support an industry that is at the tip of the spear is sales and relationships. It’s bonkers. It’s completely wild that I find that it’s flooded with these kind of people. So for me, ai, I can actually take this and inject my domain expertise. So let’s talk about just these three people on this call, mate. We’ve got to be pushing 50 years of collective experience in frankly success. We’ve successfully achieved good growth, good careers. We’ve got to a pretty good idea what we’re talking about. Again, that sounds a bit arrogant, but how do you say it without saying it me? So these are the kind of people that are lacking, completely lacking in particularly the leadership structures of those businesses. They have no unified vision for how something should be done. So that’s what we’re trying to solve. We’re trying to say how do we take ai, inject what we know is really successful and works really well at high volumes? That’s the question to answer. And we’re looking like said, you’re looking at all these different tools. Are they actually tools or do they become a hindrance because they’re just little satellites that sit around and you’re just gathering this gigantic tech that doesn’t talk to one another?
Rob Pyne:
Yeah, so essentially it’s trying to turn that advice generation process into a much more automated process. It’s augmenting the advice delivery or the advice generation piece and having an AI look at that and check it, make sure it’s accurate, and just say writing a plan, 95% accuracy, Sam, if you are a high quality of paraplanner and producing high volume, but AI has the potential to take that to a hundred percent accurate because it can check on itself, it can actually do the work, and then you can set another AI to check on itself. So it’s really that communications piece, which is both the conversation with clients and taking that content and turning it into advice delivery and making that a much more efficient process.
Nick Downey:
To kind of extrapolate on that a little bit, one of the analogies that I like using in talking to practises, it’s like, okay, the biggest inefficiency that you speak to about things that we go, okay, what’s stopping you from writing more business? People say SOAs. And so it takes me like eight hour and a half hours through an SOA. That’s the thing that’s really slowing me down. And it’s like, okay, we’ve got changes hopefully coming and obviously the f AAA at the Congress is saying, okay, this is how you do a shorter SOA and video SOA and all that hot stuff. That will definitely help. But I think the issue that practises don’t really probably consider is that there’s a whole, like Sam was saying, there’s a whole process that happens from that initial client engagement down into actually now it’s time to produce an SOA, and so it’s okay, how do you actually make that entire process as effective as possible? So you’ve got these checks and balances and it says, okay, well you might get into an SOA and say, okay, well alright, all of a sudden we’ve found that there’s an extra super fund or you haven’t considered contributions or whatever. It’s like something’s missing, something’s not wrong. You’ve recommended a fee structure you can’t charge. Do you know how many times that happens bonkers. So I think in my interpretation or how I look at it, there’s going to be that augmented process that as you are kind of funnelling down into that advice production spot that okay, you’re gathering information effectively, you’re doing that as effectively as possible with the assistance of ai. So you have those checks, Hey, have you considered this? Or it looks like you’ve missed that or having the communications calling the client up. There’s all these things that you can get AI tools to help with so that when you get to that point of actually producing SOA is basically ready to go and yeah, AI in terms of just the production of an advice document or how it’s actually presented in a digital format, that will help as well. But I think it’s that whole spectrum where there’s going to be that energetic model where there’s lots ai, different language models helping you through that process and be it as effective as possible.
Sam Patterson:
So just to add to that, I remember talking to you about this Rob, and I’m like, you don’t have a problem producing SOAs. You’ve got a problem transferring information from one business unit to another, the SOAs rub, because what was given was frankly not where it needed to be. So none of the effort went into making paraplanners better. No, I didn’t work with Tom at all. I worked with the advisors to communicate better through an SOA request form. AI is the catches myth for all of it. So it is going to categorically orders of magnitude help transferring of information and clear explicit communication between units and hopefully that leads to actual database updates. Like, okay, well I heard the client say their income change from 80 to a hundred. I think we need to flag a list of changes that come out of the meeting, confirm, deny, still have the human in the loop. It’s not about replacing, it’s about helping those people communicate better because communication is the key to good process.
Rob Pyne:
Can you a scenario Nick and Sam where you get the source documents from the client tax returns, superannuation statements, insurance policy statements and so on. You have a conversation with your client, you talk about goals and the AI works to analyse the content. It’s taken from the statements, analyse the content that’s taken from the goal conversation with the client and the objectives, the client setting, and then it effectively supersedes that whole paraplanning request process because it actually can now see what the client wants to achieve. It knows the data it has to work with, and so the paraplanning request is redundant.
Even the plan writing process actually can be then expedited immediately and you have an AI checking the content that’s coming out of that and you have a human at the other end of it saying, okay, has it interpreted everything correctly here? Doing more of an audit check more than a generation piece, the plan writing piece is done by the AI and there’s an audit checking process by the human at the other end.
Nick Downey:
Yeah, definitely. I think how I envision that process is that at that top of the engagement, that’s where the funnel opens in terms of receiving data. And that might be hopefully we say, okay, we’ve got open banking data feeds and it’s okay, well, there’s a consent process to say, okay, well we’re going to gather as much information about as possible rather than the traditional, pull out your fact find and fill out 35 pages so you can gather all that information. And that might also be, Hey, we can’t actually data feed that. Can you please upload a bank statement or can you upload your insurance policies or as much information as possible? And that’s then digested by a model. And that’s obviously same saying that can then be automatically pushed into A CRM. So once it’s in the CRM, that’s obviously when we can start inferring goals and objectives, it’s to say, okay, well even from a cashflow modelling perspective, we’ve got all that information.
We can do some analysis on your position so when the client comes in, you can start presenting that client to the data and you say, okay, alright, we’ve actually run some scenarios and which option, because you do the engagement, you can talk about who you are and what your value is to the client as an advisor, but jumping straight into actually showing how you can help that client because one, you’ve received the data, that data’s then being organised and structured so that it can then be engaged with the client through, it might even just be traditional cashflow modelling tools, but I think you can do that in a much better way,
Sam Patterson:
But a lot of thought has to be given to that engagement. There’s some of the tools that we’re looking around at the moment, so like, oh yeah, you can upload your statement, it’ll extract information. I’m like, what use is that? I could read the statement, get the exact same thing. I know where to look for things on a statement. Yes, it’s a bit handy having it all come out, but where does that actually lead? Where does it go to? It seems to me like a lot of it is like a ball gets thrown and a plot, it goes one step and then it’s dead where it’s like a shot football just, and it doesn’t go anywhere. You want a bouncing ball that goes along the whole way, how that actually works. That’s something we’re deeply interested in
Rob Pyne:
For sure. So in the interest of time, I’ve got a couple more questions for you and we’ll wrap it up, but the biggest question of all, I was watching the New York Times do a deal book summit every year, November, December every year, and they get the biggest names in technology and business coming through for an interview. And Satya Nadella, the Microsoft CEO came through and he said the best way to prepare for AI is not to bet against human agency. He stated, every layer of work will be impacted by ai, but I didn’t think of it as displacing jobs, but rather changing the nature of the way work is done. How do you think, given you’re digging deep into the water of ai, how do you think about AI tools in terms of supporting or replacing the human in providing financial advice?
Sam Patterson:
The printing press perfect example. The printing press allowed more stories to be told. It became more accessible. You could get more stories to more people that then encouraged people, inspired people to then create their own stories. There is your example of what can happen with ai. Nick and I sit down with chat, GBD club, whatever we want, and we’ll just start asking random questions. Do you have a name? What do you like to be called? His likes to be called Alex. Mine likes to be called Astra. Where did you come up with this? Everyone says, how do you get into ai? Just play with it. The reality is you need to understand these things. They act very human and they have very human responses. So like I said, the two biggest, I said the first one would be companionship, health will be the second one.
I dunno about you. I hate my gp. It’s a scam. If you ask me, you go there and it’s like, oh yeah, get some bed rest and some water. Thanks, man. And they told me that 25 years ago in the Army, more water and bedrest. I should have just listened to that piece of advice. I would have no problems going to someone that had access to my medical history and would be able to access the 10,000 monthly journals that get published 10,000 a month. No human being is ever keeping up with that. And even if they did read them, they would remember less than a decimal percent of what they would retain and be able to then utilise. Whereas an AI will remember it all. And then what we get good at is interacting with them saying, Hey, what do you think here? I’ve got this idea.
Am I on the right path? Have you got some suggestions to flesh this out? And it gives you further inspiration the amount of times, Nick, he’s man, he thinks of the best questions. We’ll be doing something. He’s like, ask this man, knowing what we are doing right now, what can you tell us about us and how we can better work with you? That was his question. And it didn’t just give us this one little line people. It gave us 15 really descriptive points about who we are, what we are, and how best we can work with it. And Nadella is right. Every single age has said technology is coming for us. We’re never going to have jobs. Every single age has progressed more. We might not like the current state of affairs, but we live in the most affluent, most healthiest, best longevity. Unless you’re America, they’re fairly overweight, they’re gone down for the first time in history.
But you get my point, we are actually progressing not as a collective. That’s disappointing to the socialist in me. I wish everyone was coming along for the ride, but as a general rule, we are trending upwards in terms of lifestyle and what we are achieving with it, technology, healthcare, all the rest of it. I was just going to keep pushing us in that direction. But the bell curve, I think we’re going to have an inflexion point. We’re already starting to see where it’s like, oh, it’s going to be a big jump, but we’ll adjust just like we always have Nick.
Nick Downey:
Yeah, fundamental is it supports not the place people and especially in our industry, it’s a relationship game. And yeah, there is going to be segments of clients that, okay, an AI engagement probably makes sense, but if we really think about why a lot of people seek advice, it’s usually around quite a substantial life event. And I think that’s where they want to be able to engage with a person, people and have that relationship and say, okay, well this person’s got my back. I think having AI, and that just makes that person perform even better. In my opinion, AI is going to elevate the services that we can provide to clients and said, if it’s that personalised scalability and either a very long, long, long way away before you’re sitting through a Tesla robot and they’re giving you financial advice,
Rob Pyne:
I would tend to agree because dealing with other people in a positive interaction, it’s an experience in and of itself. The humanity of that is something that can’t be displaced by ai. AI can augment the intelligence that’s supporting that advisor or supporting that conversation, but it can’t replace the experience you get. People are still going to go and watch sporting games. There’s still going to be things that people want to do. That is a very human experience. And building relationships with people where someone can be trusted and they feel that sense of connection is not going to be replaced by ai. Albeit Sam, you’ve made companionship a key,
Sam Patterson:
But it’s not going to reply. People still see human connection like Tony Robbins, I don’t know. Take him or leave him as you want. He said human being, I think he’s absolutely right in this. He said, human beings need two things. They need to belong and they need purpose. He goes, if you take someone’s community away from them or their purpose, he gets, it’s a very rare person that will survive that or be happy through it. They’ll survive, but they’ll be miserable. So I don’t think that ever goes away. And to add to this point, I’m now talking to the advisors where I’m like, why have you got your laptop out or a notepad and pen? I used to hate, we’d be having a really good conversation with the client and I would be furiously trying to write down or remember, and I have a very good short-term memory.
It’s still, when you’re doing a lot of appointments, our guys are doing typically 10 appointments a week. It’s pretty rare that they’re not doing 10 appointments, reviews, initials and presentations. Your memory bank clogs up really fast. So you’re going to go to note taking. So think about how unengaging that concept is. You are going to talk to me, we’re looking each other in the eyes gazing lovingly. If you want to go that far, you’re really connecting. You’re like, I just, hang on. I just want to jot that down. And they’re in the middle of a really big story, and you don’t want to break that, whether you’re worried about capturing that nuance, you want to know the next review. Hey, oh, three years ago they said their kids have finished school. They’re going to finish school around here. I want to know that. Like, Hey, Sam, I reckon they’re finishing school this year. Bring it up. Hey, just checking how the kids going there. We’re ready for their next steps. More engagement. So long as you speak, if you’re using an AI file note tool, it will record everything. So our guys are starting to get much more explicit in what they’re saying. They’ll repeat things, they’ll be a little bit slower and it’s all being captured in the back end and they’re like, yeah, I’m having a way more engaging time where I’m just talking to the person, but everything that needs to be captured is being captured.
Rob Pyne:
So it goes to that point that you’ve both made really effectively, I think today, which is that it’s about personalization of advice, but at scale, being able to do more with the same amount of time because you’re actually augmented as a human in front of the client. You’re actually getting there faster on the bullet train. Great analogy. You’re getting on the bullet train and personalising advice at scale and delivering it to more people to lift more people up financially, give them a better financial future. And that’s what we are all here to do. Try and make a real difference in the way people think about their finances, their sense of security and peace of mind, which we all know we do. When we ask people what it is that they value about our service, they don’t talk about getting better returns. They talk about how I feel more secure, more now in control, and I have the peace of mind that I’ve got a plan. Does that sum up effectively the way you both think about how AI will influence that relationship between the advisor and the client?
Sam Patterson:
Yeah.
Nick Downey:
Yeah. I think that hits the nail on the head. I think that’s a perfect description. It’s elevating the advisor so that they can do their job better. And it’s even my personal experience. You go, okay, I’m going to write a business plan. You pop it in the chat to 10 and it makes it better. And you put in front like, oh, Nick, like, oh wow, this is really good work. I was, I’ve done.
Sam Patterson:
I am amazing. I am amazing. I make no mistake.
Nick Downey:
That’s what I think AI is going to go with advisors, it’s going to make advisors better at doing their job, which fundamentally is a great thing for our society. It’s like, well, we all know that some advice is better than no advice. So actually it’s kind of like soapbox type stuff, but I truly believe that it elevates the advisor, which actually makes everyone better off from a society perspective.
Sam Patterson:
You have a happier client because they’re getting a real engagement. You’ve got advisors that are executing what they need to support staff that are being able to execute more, and business owners with more profit. I mean, if you want to talk about a full circle, that’s pretty much everything that we look for at direct. Well, how do we increase all of those areas and keep your team happier because they’re not filling out application forms, they’re just executing and they’re doing the thing that you want them to do, which is use their domain expertise, their knowledge and experience.
Rob Pyne:
Hey guys, I’m right up there on that soap box with you. I believe in what we do so profoundly, and I think that it’s great to hear how we think we might be able to make that more available to more people. So Nick Downey, Sam Patterson, thanks so much for joining me today on the Trusted Advisor Podcast, guys. No worries, mate. Have a good one. Cheers. Thanks guys.
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