Financial Planning

There is risk in any type of investing, building wealth, and developing a retirement strategy. 

New Applications for Wealth Management

The financial industry has always utilized technology to analyze, compare, and forecast investment opportunities. The Investment Advisor reviews all the data, relies on years of experience, and guides clients regarding financial planning. The latest software is essential to beat market performance with less volatility. Technology is also used to complete mundane tasks, such as compliance reporting, automated messaging, and other back office duties.

What Is New?

The newest application of technology is artificial intelligence (AI). Portfolio optimization, trade execution, and reducing losses are just a few benefits experienced in these early stages of implementation. A major advantage of using AI is that it eliminates fear, ego, emotional prejudice, and impulsiveness when it comes to finances. Many clients, especially those who are new to investing, can fall prey to doubt. The extent is dependent upon the comfort level of risk.

The Risks

There is risk in any type of investing, building wealth, and developing a retirement strategy. Some clients prefer to keep risk at a minimum, while others are comfortable with aggressive investing and a higher level of risk in order to increase wealth. They understand the losses can be severe, but are willing to take that chance. Risk management is a component of services provided by every investment advisory firm so the use of AI in making recommendations will be beneficial to both client and advisor.


No Substitute

It is important to realize that the use of advanced technology is no substitute for an experienced professional. Artificial intelligence has no instincts and no memory, and the software is limited by the information entered. It is the combination of the two that will move the industry into the future. The software will catch subtle changes in the numbers, while the professional has the skills, knowledge, and understanding of human nature needed to consider other factors that effect finances.

The economy, the political climate, and the presence of any natural disasters, among others are situations and events that the professional will take into account when analyzing financial reports. Personal circumstances are other elements that AI does not have access to when running numbers and reports. Technology, in this case, will not replace finance professionals, but provide tools so they can better serve clients. The aspects of money, like how it is obtained, how much any one person has, and what people chose to do with it, are considered very personal by the vast majority of clients. It is not likely that people will be eager to discuss finances except face to face with a professional.