How will financial planning change with technology? 

Adam Owen – Non-Exec

Financial Planning in the future will, in some ways, be different than it is today and those whose financial planner adapts to key developments in technology will be at the forefront of supporting their clients, but sadly, I don’t believe we will get flying cars.

I believe that we are seeing the emergence of three important technologies that will change our world and bring real opportunities but also some risks.

Future tech in finance

The Internet of Things

We are beginning to see the Internet of Things (IoT) bringing benefits in the home. Already, many of us use a smart speaker to access the internet without needing to turn on a PC or reach for our smartphone. We can manage our home security, heating and lighting without being there and we can access the data simply by standing in a room and asking a question.

As our relationship with this technology becomes more intimate, the smart speaker in our home will lose the novelty factor and it will become as ubiquitous as the TV remote. It is worth remembering that 30 years ago, the TV remote was still encased in fake wood vinyl and hard wired into the television.

Many of us already offer up huge amounts of information about ourselves for free to the likes of Amazon via our smart speakers and video doorbells. Companies can monitor our TV and internet viewing habits, know when we are at home, and record our shopping behaviours.

What has it taken to convince so many of us to give up all of this detail about our lives? Free delivery and a heavily subsidised household device with a friendly voice.

We have understood since the 1970s that if you are not paying for the product, you are the product. However, if the data is managed correctly, in the best interests of the customer and with properly informed consent, the IoT has the potential to be transformative in how we live our lives.

Soon, you may be able stand in your living room and ask how your investment portfolio is doing. It does away with the idea of having information at your fingertips as fingertips are no longer required.

Human-like Artificial Intelligence

I am always interested to hear people talk about artificial intelligence (AI). Often it is framed in the context that we will always need human interaction and that AI can never replace people. To some extent, based on the current technology, I can understand why this narrative is comforting but we are already seeing AI more accurately diagnosing patients than human doctors in areas where the technology has been properly developed. It surely can’t be too big a leap to imagine that AI will enter many more areas of our lives.

However, I don’t believe that AI will replace the human element of the financial planning process. I believe that it will supplement it. In a reality where AI can do things better than humans, the question will inevitably come as to whether it should be allowed to. There may be questions around privacy and accuracy but as an opt-in option for people who want their human adviser to use the best possible diagnostic tools, there may be a place for AI.

5G and beyond

The pandemic has been a catalyst for many to adopt flexible working practices and to hold more meetings virtually. However, for those who find virtual meetings with 4G technology just aren’t as good as being face to face, the next technological step, to 5G, will see the biggest advance since the introduction of SMS text messaging.

The communications industry has high hopes of untethered virtual reality gaming being the primary method of recouping the vast investment that is going in to the 5G network. Away from gaming technology, 5G gives us the opportunities to create smart cities built on the foundation of a fully functioning Internet of Things. Autonomous vehicles and other infrastructure integrations could dramatically increase public safety, reduce congestion, create significant cost savings and in the process, potentially reduce some of the stresses we experience.

This could be the backdrop to game innovations in financial planning. Imagine having untethered virtual reality meetings in a virtual 3D rendered office where it will feel like you are sitting next to the person you are talking to all with little or no loss of the feeling of personal service in the virtual 3D space. Furthermore, family members, your accountant or solicitor could join the meeting and it will feel like they are in the room.

You may be thinking that we already have this with the current virtual meeting platforms. The difference in the future will be that the technology will be such that it will be difficult to tell the difference between a virtual and a real meeting. When you set out what’s important to you, it’s likely your family will be included in some way. 

By using the same financial planner as your parents, children, or other family members, you can create a plan that reflects your priorities and the situation of others more accurately. 

It’s also a step that can provide peace of mind. You will know that the people important to you are receiving expert financial advice that will help them reach their goals and achieve long-term financial security. 

The Importance of Human Agency

So where does this possible future leave your relationship with your financial planner?

It is a reality of modern life that we share our data, and often more than we realise. A reply to a tweet, a picture posted on Facebook, the apparently innocuous act of liking something on Instagram.All of this swirls around in the global soup of data.

There is so much data that the terminology used to measure it is simply mind boggling. The amount of digital data created worldwide is predicted to reach 180 zettabytes by 2025. If you are wanting to know what a zettabyte is, write 21 zeros on a page.

We all have a data identity and through data mining and the application of data science, companies can extract value from this and, the more trusting we are of technology, the more we grow our data identity.
As technology becomes more prevalent and complex, many of us will continue to view the tech brands that we  trust as a series of “black box” devices simply to plug and play and provide immediate convenience.

In the future we will be less likely to challenge the lack of input and may not feel the need to learn the context of how the tools we use work. As we are seeing already, we will sacrifice our privacy and independence in favour of convenience.

This is where the Financial Planners of the future will need to step up. In matters of money, it will be important for Financial Planners to advise their clients in what technologies they adopt, becoming the custodians of their clients’ privacy, acting as curators of technology and guardians of information so that clients can achieve a balance between convenience and independence.

There are few things more precious in the management of your money than your data and the security of that data. As these new technologies enter our daily life, using this premise as the starting point will help to protect you whilst enjoying the benefits that the new technologies can bring.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.