AI's potential to revolutionise pensions sector
Neil Young in Performance at Malahide Castle, Co. Dublin. His lyrics to 'On The Beach' have a resonance with the way that AI is in the process of disrupting the sleepy old pensions sector at every level on the cost and value chain. Photo: Gareth Chaney
Those that have now reached the age where conversations with friends have pivoted from tales of pints and parties to pension plans and pain prevention are just the right age to have known and loved the music of Neil Young.
While the Canadian singer could never be compared to a ray of joyous sunshine at the best of times, his 1974 album, On The Beach gave the word ‘melancholy’ a whole new perspective. Rolling Stone magazine described the record as "one of the most despairing albums of the decade."
The first line on the title track goes: ‘The world is turning, I hope it don’t turn away’ and things get a lot bleaker after that.
But it’s still a line that could serve as a theme tune to the commercial world in general and the pension and financial service industries in particular as 2027 comes closer to the horizon.
But the lyric might be undercooked: ‘The world is spinning, I hope it don’t spin away.’ Our new very best friend Artificial Intelligence, AI, is on manoeuvres and just like all other fields of human endeavour these days, it is in the process of disrupting the sleepy old pensions sector at every level on the cost and value chain.
Michael MacGinty has been embedded in the digital services space for over a quarter of a century and has surfed all the waves of change from the dot.com bubble to the current AI-led business process revolution. With his wife Edel as CFO he owns and operates ‘MEANit’ which he describes as a Donegal company with a Dublin slant,’ and helps clients, principally in the construction, financial and legal sectors, drive revenue and value in their online presence. MacGinty is also a well-known speaker, author, and coach and is working to convince businesses that they can spin rapidly in the AI world and still thrive.
“We have been working on web projects since 2000, so we were very Internet Forward back then. We are now AI Forward,” explains MacGinty. “AI can be a gateway to mediocrity. It can be the worst employee, the worst tool to use and most insecure tool. People who use the tools need to be trained in how to use them first. Employees need to see the benefit for them. They should be able to clearly see that any repetitive tasks can be outsourced at least in part to AI tools. To see AI as a tool changes the perspective from seeing AI as a threat. AI is not coming to take away your job. Someone who can use AI better than you is coming for it.”
The sharpest sound caused by the ongoing AI transformation pandemic recently is that of a penny dropping on the polished marble floors of CEO suites across the globe. A realisation has dawned that AI is something to be welcomed and embraced, not just a new tool to be delegated to the IT department and forgotten about. The few remaining leadership teams that resist this truth are probably about to renew their memberships to the Flat Earth Society.
Research by Microsoft reveals that three out of four knowledge workers are already using AI for work and almost 80% of these are doing so without employer approval. Uncontrolled access within company systems presents clear and present danger to fiduciary and governance compliance as well as client data security. This is particularly relevant to the pension and financial advice industries which are already using AI tools to draft investment recommendations, automate communications, interpret statutory law, and estimate benefit calculations.
“We see proper use of AI as a potentially huge benefit to the pension and financial advice industries as with so many other professional services firms,” continues MacGinty, “and this is the space we work in. Not to replace people, but to allow them to do more, do it faster and do it better. Whilst at the same time giving them back time to do what they are really qualified to do – give Financial Advice. Imagine getting the time every week to be client facing to actually give financial advice all day long.”
Pascal Curran, a client of MEANit and founder of Advice First, a financial services company also based in Donegal, has enthusiastically embraced AI to help him thrive at the pointy end of the pensions business – helping actual people make sound decisions on the disposition of their hard-won nest eggs. Curran is as enthusiastic about the benefits of AI as a duck is to water.
“At Advice First, we are using AI across a growing part of the work that sits behind the advice,” he explains. “It helps us with pension and retirement planning work, research, calculations, investment reviews, protection recommendations, mortgage strategy work, client reports, annual review preparation, client correspondence, and regulatory sense-checking. Increasingly, we are also using it as a second pair of eyes. It can challenge a calculation, flag something inconsistent in a file, identify information that may be missing and help us test whether the recommendation actually matches what we know about the client.
"For me, the biggest benefit over the next three to five years will come from automating more of the workflow around the adviser. I think the same applies further down the chain with pension providers,” he says.
The strategic embrace of the new possibilities AI offers the businesses of both MEANit and Advice First could be described, over simply as; ‘Down with spreadsheets. Up with People!’ Let the machine capture and distribute the information and free up human beings to do what they are best at. Manage relationships, make trustful judgements, and make sure information is clear, relevant and understandable.
Asked how he’d sell a career in his industry to a new college graduate, Curran replies that, “my first piece of advice would be to develop very good people skills. That comes first. Financial advice is fundamentally a people business. Clients are not simply looking for calculations. They are dealing with uncertainty, family decisions, retirement, tax, risk and often things they are worried about. The ability to listen properly, ask good questions, understand what matters to somebody, and explain complicated financial decisions in plain English will remain extremely valuable.”
Michael MacGinty agrees but would also tell the graduate to “go and get to understand AI, “You do not need to understand how it works from a code point of view, only what it can do to help you. If you want a job in the future, you will need to be conversant with AI. And specifically, how to use AI in relation to any job within the Financial sector. Find out how you can do the job better and faster, but with a focus on the better, better for the clients you serve. Then use your own personal skill set with clients to determine what is best for them, with the time that you have saved using AI to do the menial tasks.”
Or, as Neil Young might put it, learn and embrace the possibilities of this new world and use it on your quest to go ‘after the goldrush’.
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