AFRGA1 A043

AI to help advisers with client needs

The AI application will be able to help advisory businesses understand when their investor clients may need to engage with their adviser.

“We want to use the datato create a better qualityof service for theinvestor.”Adam Pointon, Praemium CTO

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For nearly two years, a select team of developersat Praemium has been building an artificialintelligence/machine learning application to helpadvisers better engage with clients. The release isparticularly timely in the wake of the BankingRoyal Commission.

You don’t have to be a fan of the Terminatormovies to know that letting a computer think foritself can be a recipe for trouble.

That’s why Praemium chief technology officerAdam Pointon’s team has taken a cautiousapproach to using artificial intelligence andmachine learning (AI/ML) to enhance Praemium’sinvestment adviser portal.

‘‘We’ve been very, very careful. It’s notsomething that you can just quickly jump intoand hope for the best,’’ he says.

Not only has the leading provider of managedaccounts platforms been careful, Praemium hasalso kept its AI/ML project quiet, at least untilnow.

Across Praemium’s global operations, Pointonoversees more than 100 developers, but only asmall handful knew about and worked on theproject from its inception nearly two years ago.

What they were trying to do was build an AI/MLapplication to create insights from the collectivebehaviour of thousands of investors and theadvisers – Praemium’s clients – who service them.

Now being integrated into the Praemium’splatform, the application will be able to helpadvisory businesses understand when theirinvestor clients may need to engage with theiradviser.

Pointon has been confident from the start thatthe enhancement would add value for investorsand their advisers, but in the wake of the BankingRoyal Commission, established soon afterPraemium started work on the project, hisconfidence has grown stronger.

Many bank-aligned advisers are starting tomake the move to an independent businessmodel and distance themselves from theestablished institutions, Pointon says.

‘‘They’re going out and being moreindependent now, and one of the best ways theycan do that is the managed accounts space, as itprovides their clients with real transparency andclear value for money.’’

The Royal Commission has also focusedadviser’s minds on the need for consistently goodclient service and engagement, the aim ofPraemium’s AI/ML application.

Pointon says the team has made a consciouschoice to steer clear of generating investmentinformation and asset allocations, or profilinginvestors’ behaviour with the traditional aim ofselling more products or advertisements.

‘‘We’ve gone with ‘how to bring the relationshiptogether’ and ‘how to improve the investor’soutcomes’ as the aims of our AI project, andthat’s how we landed with identifying investorsthat may need refreshed financial advice,’’Pointon says.

It is what Pointon modestly describes as ‘‘apretty positive outcome’’.

In practical terms, the application will sit withinthe adviser portal in a new section called Insights.

‘‘It basically pops up as new insight and it says

‘Jane Investor is showing similarities to clientswho’ve demonstrated the need for adviserengagement’.’’

Advisers taking part in the first tentative stageof the rollout, which Pointon expects to takeabout six months in all, have reacted positively tothe alerts issued by the system.

The insights are based on the data Praemiumanalyses on the thousands of investors servicedthrough its own portals, and are shared only withthe advisers servicing those particular clients.

He is also at pains to point out that the ethicalcomponent of the application is at least asimportant as the technical one.

‘‘We want to use the data to create a betterinvestor to adviser experience, a better quality ofservice for the investor,’’ Pointon says.

Despite his enthusiasm about theenhancement, Pointon is eager not to oversell it.

He likens the new feature to the existingportal, which takes care of the routine tasks ofadvising clients and managing their investments,and the customer relations management (CRM)function already built into it.

The new feature of the platform is

undoubtedly high-tech, but Pointon insists that itis still just a tool to help advisers do their jobsbetter rather than to do their jobs for them.

The slow-and-steady rollout is designed tomake sure the message gets across, adviser byadviser.

‘‘We do want to talk to the advisers to just saythis isn’t the perfect solution, this is just anothertool to really help you provide better service inwhat is becoming more and more a service-based industry,’’ he says.

‘‘It’s about using it for the right purpose. We’vedeployed it to help investors get a better servicefrom their advisers.’’

Pointon believes AI and machine learning willplay an increasing role in the advice industry insupporting its transformation to a professionalservice industry. Praemium has also utilised AI todetect potential money laundering and othercases of abuse across the platform.

With increased visibility of data, there is thepotential for greater insights into the ongoingneeds of clients. Looking into the future, theOpen Banking initiative and the merging ofpersonal data from various sources, will createopportunities for a greater level ofunderstanding of clients and therefore morepersonalisation of products and services. Thishas the potential to be extremely positive for theend customer.

However, like all technology which can be dualpurpose, some of these insights will result intargeting of sales opportunities or advertising.

This is not the approach Praemium intends toadopt.

‘‘Our intention is to continue to focus oninvestors and adding value to their adviserexperience, improving financial wellbeingoverall,’’ Pointon says.

43Wednesday 26 June 2019 | The Australian Financial Review | www.afr.com