As the next step in the analogue vs digital debate that has rocked due diligence for years, the rise of AI is taking investment decision-making to a whole new level.
At one point in time, PMs and advisors will have assumed that investors favour in-person meetings to truly understand where they should place their assets. Even when fund websites and social media took over as methods of outreach, a fund’s curated thought leadership could still make it to investors and drive engagement, just in a different guise.
However, the UK’s FCA has conducted research to find that investment audiences are moving well beyond traditional media formats, and even beyond ‘finfluencers’ or celebrity endorsements that are trying to make investing more approachable.
AI tools are now the most trusted sources of advice for 18 to 40 year old investors or would-be investors. 56% agreed with this notion, as opposed to favouring TV and radio (47%), the press (46%) or social media influences (29%).
Perhaps more striking to firms is how voluminous AI adoption has been. Four out of five respondents have used AI for investing at some point, and two-thirds expect to use it further in the next year.
Elsewhere, investors seem to misunderstand the protections applied to AI generated financial content:
- 44% think this information is regulated.
- 38% think it is fine to base an investment decision on a chatbot’s guidance.
- Nearly a third believe they could claim compensation from the Financial Services Compensation Scheme of the Financial Ombudsman Service if AI-sourced advice did not work out.
For the record, this latter point would not happen, as general AI tools sit well outside of the FCA’s regulatory threshold.
On the point of regulation, these findings are not forcing the FCA into making any formal rules for AI-based investment advice. But its own response did come in the form of guidance: 5 tips for verifying AI sources, emphasising the lack of safety net, and reminding consumers that past performance data fed into an AI system will not predict returns.
So, what does this mean for fund marketers?
AI chatbots are replacing the authenticity of human influencers, and even expert financial journalists, as seen by the very demographic IRs and fund marketers are trying to reach.
The story seems far less about AI’s compliance battle (which usually dominates investment discourse), and instead concerns changes to content distribution. AI is now the primary research tool for younger investors, well before they may find themselves looking at a firm’s own marketing material.
This poses an opportunity, however, as AI Search can leverage a fund as a valuable source, if a firm can convey its differentiators and fundamental investment strategies. Firms should audit how LLMs can accurately describe their fund, performance and risk profile, in the likelihood that this will be the first information a prospect sees.
At the same time, IR teams should revisit their testimonial strategies considering that influencers (who may be used for affiliate marketing) are the least-trusted channel in today’s climate.
The FCA is likely thinking about where AI-based guidance merges with regulated advice. Its own recommendations for investors shows that this is still an area of confusion, so firms experimenting with website chatbots for AI-driven portfolio advice should keep an eye on more formal rulemaking as time goes on.
Source
FCA, “Young investors trust AI more than TV or celebrities”
