The future of financial planning

Integrated financial planning represents much more than investment management but affects other areas of expertise as well as the relationship with clients. (Photo: 123RF)

Guest Expert. Recently, IQPF celebrated its new 2021 graduates As such, more than 240 financial planners have joined the profession and will be involved in imparting knowledge to the general public. So let’s take this opportunity to reflect on the future of this career and how technology is affecting the delivery of financial services.

Population trends may not be clear: a growing number of clients will sooner or later retire. However, fewer professionals will be able to support them in developing their retirement plans. Thus, the evolving technology will support both the financial planning profession and many other areas.

It is clear that young consumers are more inclined to use new technologies and often seem to prefer independent management of their personal finances. One only needs to think about the popularity of discount investment brokerage and the increasing use of Robo-Advisors. However, keep in mind that integrated financial planning is much more than investment management but affects other areas of competence as well as customer relationships. .

Technology and gamefiction

If there is one area where technology is very present, it is financial services. We look at this more specifically in stock market investments where new applications borrow functionality and interfaces from the world of video games, a phenomenon called gamification.

However, the short-term reward processes of these platforms request those parts of the brain that are more easily affected there. Behavioral meaning explains why it is easier for the human mind to focus on the present moment than to consider specific distant goals for leisure planning, for example. That said, some of these features can be put to good use in developing long-term storage habits. Ongoing research is exploring how the ability to save for leisure can be improved through sporting strategies.

For example, some applications are starting to provide step-by-step progress systems as well as small, fast and regular rewards to better track future goals. Also, competitions, rankings, tables and badges increase the level of enjoyment and thus strengthen good savings behavior. Ultimately, the impending use of artificial intelligence (“AI”) will lead to the development of more suitable financial applications for the general public.

Artificial intelligence and financial services

AI has advantages such as the ability to study large amounts of data and great computing power for AI algorithms. Suppose it has a head start on the analytical power of the human brain! AI is already present in various situations such as:

– Answer simple questions from website users with small conversational robot software known as “chatbots”.

– Process credit ratings and scores for consumer loans.

– Customize the price of specific insurance products.

– Assist in allocating an investment portfolio.

– Be the basis of applications that track a motorist’s driving habits to adjust their insurance premiums accordingly.

However, keep in mind that nothing is perfect and problems can arise. First, it’s important to consider the protection of personal data and respect for privacy because AI uses a lot of data. Care should be taken to obtain informed consent for their use.

In addition, there may be a variety of biases such as:

– Programming bias during computer coding or using incomplete databases that are not representative of the serving population.

– Non-representation bias: AI algorithms may not take into account customer diversity such as age, gender, nationality, location, etc. For example, not all people have the same level of skills with new technology. In other words, a younger client may be more comfortable with virtual financial services than older people.

– In the case of loans, some background check process may be affected by the problem of unrepresented credit rating. Thus, under the influence of increasing socio-economic inequality, individuals in regions with low or minimal credit history of the population will be rejected by the AI ​​algorithm.

– In the insurance sector: We must qualify between the regularity of regular discrimination (different values ​​according to age, being a smoker or a non-smoker, between a man or a woman, etc.) and the use of racial variables in groups, postal codes More uncertain than) or even different behaviors. Examples include U.S. insurance companies that sell life insurance plans only to customers who agree to use an app that tracks their activities.

In conclusion, since different technologies are very present in the financial field, the contribution of artificial intelligence will be advantageous as it will be possible to offer a wide range of both financial planning services and financial advice to the population. However, it will be important to implement everything in an ethical and responsible manner to limit issues related to personal information.

Solomon Gamache

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