Blue Chip Issue 89

BLUE
CHIP
PRACTICE MANAGEMENT | Technology
The Bermuda Triangle of change
in the future of financial advice
For many years, the financial planning profession has been
striving to be recognised as a true “profession”. In this
pursuit, we find ourselves navigating a complex landscape,
which we can aptly describe as the Bermuda Triangle of
financial planning. This triangle consists of three interconnected
elements reshaping the industry as we know it: automation,
artificial intelligence (AI) in the advice and planning stages and
the fascinating field of behavioural sciences. Let’s take a closer look
at our proverbial Bermuda Triangle.
EMBRACING AUTOMATION
Automation provides financial planners with powerful tools to
enhance their services. Here are some key methods of incorporating
automation into the financial planning process:
1. Client onboarding and reporting. Digital platforms are used
to gather client data, introduce services and ensure compliance.
Automation can be applied to simplify investment reports and
financial documents for clients, saving time and improving efficiency.
2. Data aggregation. In a world where financial data is scattered
across various sources, automation can consolidate this
information, offering a comprehensive financial overview for more
informed decision-making.
3. Portfolio management. Investment platforms equipped with
automatic portfolio rebalancing help maintain portfolios aligned
with client goals. Outsourcing this functionality to a portfolio
manager is crucial for effective management.
4. Online presence. Consistency is key in the digital era.
Automation ensures a steady flow of content on social media
platforms, enhancing an advisor’s online presence.
5. Chatbots. Basic client queries are addressed instantly with the
help of chatbots, saving time and providing quick responses to
common questions.
It is essential to remember that the personal touch in financial
planning remains irreplaceable.Automation should serve as a complement
rather than a substitute for the client-planner relationship.
THE FUTURE
Artificial Intelligence (AI) is a transformative force in financial
planning. Combined with insights from behavioural finance, AI
reshapes the future of the profession. Here’s how:
1. Managing emotions and educating clients. Financial planners
guide clients through emotionally charged financial situations,
ensuring that decisions are not solely driven by emotions.
Educating clients about their behavioural biases can make them
more informed and engaged in the planning process.
2. Addressing biases. By identifying
biases such as loss aversion or
overconfidence, planners tailor advice
to counteract these tendencies,
leading to more rational financial
decisions. AI also helps predict
which clients would have more
emotional reactions to market events
and proactively remind financial
planners to reach out to them at the
appropriate time.
3. Improved communication.
Understanding behavioural biases
helps planners communicate more
effectively, resulting in clearer and
more persuasive advice.
4. Simplified choices. Decision
overload can paralyse clients. AI assists
in limiting options, making choices
clearer and more manageable.
5. Hybrid-advice offering. For
clients with straightforward financial
planning needs, such as planning
for children’s education or a holiday
home, automation takes care of
financial planning and goal tracking,
ensuring efficient solutions.
Incorporating these technological
advancements into financial planning
practices enhances the advisor’s
value-add to clients. However, it’s
crucial to emphasise that the personal
touch remains vital. Technology Tiaan Herselman, Head of Advice,
should complement, not replace, Old Mutual Wealth
the qualities of human intuition and
empathy that financial planners bring to their clients.
Furthermore, the incorporation of behavioural finance
principles enables financial planners to provide more personalised,
psychologically-aware advice. This approach leads to better
outcomes and fosters stronger client relationships. As we navigate
the Bermuda Triangle of change in financial planning, embracing
automation, AI and behavioural sciences is not just a strategic
choice but an essential one. In a world where change is constant,
adaptability is the key to thriving and providing invaluable services
in the evolving landscape of financial planning.
40 www.bluechipdigital.co.za