The Financial Planning Standards Board Issues AI Guidance
The Financial Planning Standards Board (FPSB) released its guide for financial advisors to follow when implementing artificial intelligence (AI) practices, in an effort to promote transparency and responsible oversight.
“AI is reshaping the practice of financial planning, but trust, professional judgment and accountability remain essential,” said FPSB CEO Dante De Gori in a statement. “This new practice guidance note is designed to help financial planners embrace the benefits of AI while reinforcing that they remain responsible for the advice and recommendations they provide to clients.”
Advisors implementing AI practices should be careful to practice professional judgment, human oversight, transparency, and confidentiality, the FPSB said in their guidance. It builds upon the organization’s FPSB’s Global Financial Planning Standards, which highlights professional and ethical obligations when using AI in client communications, data gathering, and research.
The guidance also touches on areas that require extra safekeeping, like privacy, cybersecurity, and the accuracy and reliability of outputs, which advisors already say are top concerns when considering AI implementation.
“AI can enhance how financial planners serve clients, but it must be used with care, transparency and professional oversight,” said FPSB Professional Standards Committee Chairperson Darren McShane. “FPSB’s new guidance note helps financial planners understand how to use AI responsibly while keeping professional judgment and client interests at the center.”
FPSB’s recommendations come amid growing support for AI technology in advisory firms. Global research from the firm found that two in three financial planners expect their companies to incorporate AI, or plan to implement the technology, within the next 12 months.
The findings, which surveyed over 6,200 financial advisors in 24 territories, reporeted that 78% of respondents are convinced the technology will help them better service clients, and 60% believe it will boost the quality of financial advice.
It also highlighted the number of advisors who currently utilize the tool. According to FPSB’s research, financial planners are using AI in client communications (41%), client data collection (33%), and client risk profiling (34%).
Other reports show shifts in opinions about AI, as advisors look to leverage technologies to scale their practices. Seventy percent of advisors in a Natixis Investment Management report credit the tool for helping them carve out time to speak with clients, and 76% say that professionals who use AI have a competitive advantage over other businesses.
FPSB’s guidance was conducted by its Professional Standards Committee and in consultation with its network of organizations, including over 236,000 global CFP professionals.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news.