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Advisers must take AI seriously: Netwealth

Advisers must take AI seriously: Netwealth

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By Larissa Waterson ·
May 31 2017

Advisers must take AI seriously: Netwealth

Artificial intelligence for the advice sector is not "science fiction" and advisers need to start "taking it seriously", with Silicon Valley firms already using it to replace the roles of fund managers, Netwealth has said.

Speaking on the Adviser Innovation podcast, Netwealth joint managing director Matt Heine said the Australian advice sector will have to become familiar with the idea of artificial intelligence (AI) and should learn from US advisers who are doing things that "blows your mind".

Mr Heine said companies in Silicon Valley are using AI and self-learning to replace the duties of fund managers.

"One of the companies we met with, Sanlam, shared that they're launching a new artificial intelligence investment service ... it blows your mind actually," he said.

"Every asset class has 600 self-learning algorithms running at all times. Each of those 600 algorithms then has a master algorithm which decides if it's doing a good job or a bad job. It picks the algorithms that are doing good jobs and discounts the ones that are doing bad jobs. It then combines it with 600 algorithms from every other asset class, and has a master portfolio manager that is taking the best ideas from each of those asset classes.

"I haven't done the maths, but we're talking thousands and thousands of different algorithms running different scenarios in real time building your portfolios, and the performance has been absolutely outstanding."

However, AI is regarded as simple in the US, with an expectation that it will get smarter in the next two years, according to Mr Heine.


"The thing about artificial intelligence is that, I think over in the Valley and over in San Fran, it's still considered 'dumb'," he said.

"If artificial intelligence is considered dumb at the moment, but they're expecting it to be much smarter in two years, capabilities in what we're going to start seeing coming out in the next two years is going to be absolutely incredible."

While the disruption occurring in the US is absent in the Australian advice sector, Mr Heine warned "it won't be long" before Aussie advisers feel a sense of "urgency".

"All of the things that we saw over in America are highly portable and it won't be long before someone brings them out," he said.

To listen to the full interview with Matt Heine, check out the latest episode of The Adviser Innovation Show:


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