A Hybrid‐Based Expert System for Personal Pension Planning in the UK

Abstract

While advanced computing technology, and particularly the use of artificial intelligence in the form of expert systems, could not necessarily be said to be common in the US financial planning domain, it is certainly not unheard of. This situation is significantly different from that found in the comparable UK domain. This paper is based on a project to look at the use of computing technology to support the role of the personal financial adviser in the UK-a domain in which little published research work has been undertaken. It briefly describes the current UK marketplace and details the construction of a small hybrid-based expert system, built to support the selection of personal pension plans, to illustrate the inherent value in developing such technology in this domain. The paper discusses the benefits of using hybrid representational techniques as opposed to single representations in creating an expert system in a financial planning domain.

Communication and personal selection of pension saver’s financial risk

“…When the underlying argumentation and the substance of the optimization is opaque to the those giving financial advice and those receiving it, there is a risk that unfortunate financial decisions are made even if the underlying financial expert systems are sophisticated. For example, Agnew et al 2018, Buell et al (2017), Lymer and Richards (1995), and Pasiouras (2018) propose different arguments of the financial importance of transparent processes between consumer and provider.…”

“…That is beyond the scope of this work; a challenge for us remains the generalization of the current approach without compromising its transmissibility. Financial planning is of course a hot issue at the moment, but it has been for long; see Lymer and Richards (1995) and Smith and Keeney (2005) for an alternative view on financial considerations of future safety. We do have a strong belief that simplified communication is a powerful stepping-stone to optimizing financial advice.…”