The AI threat to financial advisers is not, as Lee Coates argues, a question of whether machines will eventually process information more efficiently than humans. It is a question of what happens to professional value when they already do.
Coates, a director at In Accord and the Accord Initiative, makes a case that cuts closer to the bone of financial planning than most technology commentary: knowledge, he says, is becoming a commodity. Understanding is not.
When Knowledge Stops Being a Differentiator
Clients can already ask any number of AI systems to explain diversification, sequencing risk, or pension drawdown mechanics. As the technology improves, those explanations will become faster, cheaper and more accurate. The AI threat to financial advisers does not lie in that trend itself. It lies in any firm that continues to position its value primarily around the ability to explain such things.
Coates draws a useful distinction. Clients do not typically sit up at night wondering whether their ISA is technically diversified. They wonder whether they can retire, whether they will run out of money, or whether the choices they are making are consistent with what they care about. Those are life questions expressed through financial language. And answering them well requires something that pattern-recognition cannot replicate: professional judgement about the person in front of you, with all of their hesitations, inconsistencies and competing priorities.
Andrew Storey of EV, speaking on the Accord Talks podcast that prompted this piece, made a point worth holding onto. Capacity for loss, he noted, is an ability, not a preference. Asking a client how much they can afford to lose does not, on its own, tell you how much they can afford to lose. That figure needs to be calculated in the context of a wider financial plan and then communicated in a way the client can genuinely act on. A risk score recorded on a fact-find is not a client understood.
What Good AI Governance Looks Like in Practice
For portfolio-focused readers, the regulatory picture here matters as much as the philosophical one. The Financial Conduct Authority published an AI Update in April 2025, setting out how its existing rules apply to artificial intelligence, a signal that the regulator considers current frameworks broadly adequate rather than in need of wholesale revision. More recently, PwC UK noted that the FCA announced a second cohort of its AI Live Testing programme opening soon as of 3 December 2025, extending a structured environment in which firms can trial customer-facing AI under regulatory oversight.
That context matters for any advice firm assessing where AI fits in its own processes. The question is not whether to adopt the technology, but how to govern it responsibly. Iga Sloan of Digital Regs, also speaking on the Accord Talks podcast, set out a practical framework: know where AI is being used, start with the business problem, assess vendors and data flows, allocate ownership, check outputs, and document the process. That is not a counsel of caution about AI; it is a counsel of rigour.
The AI threat to financial advisers that Coates identifies is, in this light, a reputational and commercial one rather than an existential one. Firms that use AI to recover time currently spent on administration, report drafting or regulatory research will have more capacity for the conversations that actually determine whether a client feels understood. Firms that resist the technology, or adopt it without governance, face a different set of risks.
Consumer Duty places an obligation on firms to demonstrate good outcomes, not merely compliant processes. If AI can improve consistency, reduce administrative error and free advisers to spend more time on suitability assessment, the regulator’s direction of travel and the commercial incentive point in the same direction.
The real differentiator, Coates concludes, is whether advisers can raise the standard of understanding at the same pace that technology raises the standard of information. For a profession built on trust and long-term relationships, that is a more useful frame than worrying about whether a machine can explain a fund fact sheet faster. Over any reasonable investment horizon, the advisers who combine strong AI governance with genuinely human judgement are the ones best placed to demonstrate value that a client cannot simply look up.
The FCA’s AI Live Testing second cohort represents a concrete next step for firms wanting to trial customer-facing applications under structured regulatory oversight, with the programme’s opening confirmed as imminent as of early December 2025.
