Sam awoke from a sound sleep around 7:15 AM. Sunshine filled the smartment™ even though it was rainy outside. The recently installed Lytelife™ technology was providing natural light and vitamin D through LED structures on-demand.
He got dressed and went downstairs for a breakfast of avocado toast, fresh orange juice, and java served by Parker, a service robot and PC outfitted as one. Before he left for the day, Sam’s virtual butler, a hologram, informed him of the weather, updated him on last nightโs Wimbledon match, and displayed areas to avoid for traffic concerns. Waymoโs driverless car was just moments away since the butler had already scheduled Samโs trips for the day.
Once inside, the iDriver confirmed the destination, adjusted the temperature to Samโs profile preferences, and asked if he preferred to listen to the news or his favorite Spotify station during the ride.
Sam was on the way to get the perfect haircut. Upon arrival, he looked for the designated booth number on the large screen above that resembled a flight monitor at an airport. Sam proceeded to his designated booth where AI Hairy, the artificial intelligence that powers the booth, instructed Sam to sit, relax, and get comfortable as a device gently wrapped around Sam to keep the desired posture.
AI Hairy then displayed 12 hairstyle options through the large glass pane in front of Sam. He was able to alter the look from front to back, to see the styles more defined. Sam selected the favorite hairstyle and length option, and the AI placed Sam’s image inside the hairstyle model for final signoff. Hairy then completed the styling in roughly 45-minutes with the โminimal conversationโ option selected by Sam.
Asset and Legacy Planning with AI
Sam was living a beautiful life. Being an architect was financially rewarding, and he knew it was prime time to adjust his financial plans to include asset and legacy protection. Parker, the service robot and PC, downloaded the most updated PrecisionWealth™ technology and proceeded to ask Sam a series of 50 questionsโall related to behavior, finances, risk, and death.
The AI-driven in-depth learning program tailored each question as the algorithms processed the previous answers. In less than two hours, Sam had a mid-level financial plan that would be reviewed and adjusted every 90 days. Sam looked into Parkerโs retina-scanning eyes. Once Samโs identity was confirmed, $275,000 immediately transfers to the custodian for investment.
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Sam is also charitably inclined to help the Boys and Girls Clubs of America. PrecisionWealth™ suggested a life insurance policy for the funding of an endowment in Samโs name. His eyes were then scanned using biometrics for underwriting. Over 60 tests were conducted via the retina scan. After AI searches through Samโs history and financial data, the underwriting gets approval in seconds.
Sam goes the entire day without one human interaction.
Abrupt Changes That Transform
Samโs story will move from fiction to non-fiction faster than any reader imagines. Itโll happen almost overnight. Time allowed our forefathers decades to transform from agriculture to industry. They had time to adjust, learn, and adapt; time to rebalance themselves, careers, and lifestyles.
Abrupt change is coming. What took 100 years to advance in the past will occur in the next five years. From Transportation as a Service (TaaS) to precision medical diagnostics from a simple blood test; incredible technology enhancements will overtake consumers at lightning speed.
Itโs estimated that by 2030 almost 40% of all US jobs will be automated. No economic sector will be unscathed by the forthcoming societal changes. One of the most significant economic areas to be impacted will be financial services, as AI and non-humans will complete 60% of output. And it isnโt isolated to Wall Street.
Independent financial services professionals will see their methods, staff, and processes altered significantly.
Manual processes will cease by the algorithmic opportunity, and transactions will be accurately executed with fewer input or output errors. These algorithms will improve efficiency, reduce labor costs, limit compliance risk, remove emotional behavior and risk, and streamline logistics chains for most financial transactions. The result will be a cleaner experience for the retail investor.
Clientsโ needs and responsibilities are quickly changing. Therefore, the financial planning process must change. Cross-sector technology advancement will have a significant impact on the way financial professionals plan with their clientele. We forecast three transformational changes thatโll significantly impact the world of finance.
The Reality of Changing Client Needs
First, tomorrowโs client will need financial advice related to cash flow behaviors. Everything from new debt to the loss of jobs to technology will impact todayโs average investor. Debt will grow incrementally as the world changes around us. Added expenses, limited job growth, and below-average wage increases will leave the consumer needing smarter advice about how to manage and spend their cash flow.
Consider the debt we face today. US household debt is over $13 trillion. US credit card debt is currently above the 2008 financial crisis levels. And, student loan debt is up 9% per year since the financial crisis.
Now, add in the future disappearance of certain trades brought on by technologic advancements. For the average consumer, itโll become increasingly difficult to advance in work and sustain the wage growth needed.
Some will advance via ongoing education, and others will seek additional jobsโsometimes working two or three jobs for every one job in the past. With pressure from mounting debt and job market shifts, cash flow management once reserved for retirement planning will become a matter of necessity for every client at any age.
Related: Tomorrow, Today: The Future of Financial Services
Second, we canโt escape the effects of demographics on the economy. We donโt focus on this enough since we’re naturally near-sighted. Most countries are in the same battle with what to do and how to handle the aging population. (This post wonโt discuss government benefits and intervention, but will focus on infusing financial advice with biogerontology technology when planning for an aging population.)
Technology is going to allow us to live longer. However, longevity isnโt always a benefit unless oneโs wellness is optimal. In a country thatโs traditionally lazy with health and wellness, life-extending technology may end up costing us in a population that downplays biogerontology and healthy aging.
Regardless of wellness or not, todayโs client will require adjustment to financial planning due to increases in longevity. One requirement will be retirement and post-retirement fluid income plans. Planning for average life expectancy and making investments accordingly will no longer suffice. Multiple methods may be required, monitored, and executed as the client ages and more factors about their internal age are recognized and endorsed.
In summation of the aging portion of our research, financial services firms must create comprehensive care and aging plan models. An example of a full-scale care planning offering is Financial Independence Groupโs creation of Whealth™. Our Whealth™ model is a complete wellness and wealth management tool for financial professionals to customize and implement over a three-year timeframe within their current businesses.
Third, structural changes within society and technology will accelerate the need for financial advice to include heir and legacy planning. We believe that every financial professional and advisory firm should establish and offer a true next-generation planning model. This may very well be the most significant opportunistic shift for financial services in the immediate future. Most firms donโt have a basic heir model, and even less have a real formal offering. However, technology will alter this almost immediately. We predict the disruption of two next-generation paths.
Free Download: Whealth™ Whitepaper
Disruption Accelerates
The initial disruption has already begun with information technology. This will continue to impact how advice is constructed, delivered, and executed. Recall the earlier story about Sam. The way Sam received financial planning and advice is available today. It has been for a few years. It simply hasnโt been advanced much past phase one.
Quantum offerings of technology and finance will become available in phase two and beyond. Much like PrecisionWealth™, the fictional company in our story, sincere advice will be extremely customized and โliveโ alongside the user. Guidance will be pure and objective and could plan for users the same way that most sophisticated firms do today via humans. Financial planning and advice once reserved for the ultra-affluent and family offices will become mainstream and holistic in offerings and benefits.
Employment will be the other path subject to disruption. Financial advice will be altered to account for the change in workforce opportunities, the lack of jobs, and motivation to seek employment by todayโs youth. The good news is that technology will create new jobs that donโt exist today. These jobs will be in areas like video-gaming and deep coding, or managing boutique shops and restaurants assisted by AI-enhanced robots.
For those next-generation clients that achieve the jobs of tomorrow, more burst planning will be required. Burst planning™ emphasizes multiple complexities and accounts for shifts in the plan and overall investments.
For instance: A deep coder may work with Company X for a salary and benefits, then abruptly move to Company Y with a commission, a potential bonus, and stock options after a 12-month incubation process. This burst, or rapid and consistent shift, in gross input (salary, benefits, options, timing, and valuation) wonโt work inside of todayโs linear software models or the traditional minds of most financial planners.
Related: How Technology is Disrupting the World We Live in and What it Means for the Financial Advisor
The bad news is these jobs wonโt require the vast amounts of human capital the way factories did during the Industrial Revolution. Now, the reality is job creation comes with a decreased need for employees. This naturally increases competition for those that want the jobs. However, it can also create a lack of self-worth and desire to achieve for those that feel unequipped.
Client Concerns From Disruption
Investors may be forced to examine cash flow and investment options knowing they may have children living with them much longer than expected. Complete retirement plans become disrupted in this model as location, living standards, and the possible care required for grandchildren becomes top-of-mind for parents.
Guaranteed income and guaranteed employment will also become factors. Parents may invest to hedge or buy-up the factor used in guaranteed income for their children. Moreover, life insurance will have an entirely new meaning as the income protection and estate creation it offers will become invaluable.
There is no longer one economy. Because of the many generations, types of work experience and education levels, the US economy is a conglomerate of hundreds of economic subsets. Advancing technologies will transform every economic subset. These complexities will require an adjustment in financial services offerings for each subset. Financial services havenโt seen a change like this before, nor will it correctly anticipate the hyper rate of future transformation. The closest comparison is the move to automated algorithmic trading platforms.
Although every financial professional must adapt to market evolution, for those that anticipate and respond to changes quickly, opportunities will be boundless. All economic subgroups will need exhaustive planning once reserved for the wealthy. Firms of all sizes will be able to capitalize on this new need by creating a variety of models for a multitude of economic groups.
Bottom Line
The financial services sector has traditionally been slow to innovate. Most of the global disruption due to technology will lead directly back to finance. Every household will be impacted by the changes brought on by technology advancements. This will require alterations in household financial, investment, aging, and insurance planning.
Unlike driverless cars, some of it will still require a human at the wheel. However, much will be conducted by technology itself.
The key recommendation today is for financial professionals to examine how to work in a brand-new landscape. One without human interaction. One with Sam.
Keep Reading: Key Traits of Effective Financial Professionals
Contact info@surgebc.com for additional information. ย This is not investment, tax, or legal advice and is the opinion of its authors, Surge Business Consulting.
