The future of financial advice
Use with with caution. AI is not a reliable financial planning tool.
We regularly ask AI the same question to test their progress and see if we can use AI, and/or whether they are “eating our lunch”. We recently included Gemini (used to be Bard), Claude and Perplexity to see if the new comers had a better handle on things. We also included a “trend” indicator, measuring…
Jake of the Nullarbor
Jake used to be a top solicitor in Sydney, with a corner office, and panoramic view of Sydney harbour. His specialty was contract law. He paid little attention to the small team looking into artificial intelligence until they asked him to hand over all the files on all his clients. They explained this was so…
Limitless everything.
1. Limitless clean energy with fusion reactors There are 39 companies in Nuclear Fusion which include CFS, Helion, General Fusion, TAE Technologies and Tokamak Energy. Breakthrough Energy Ventures, run by the Bill and Melinda Gates Foundation, are lead investor in Type One Energy that seeks to provide clean energy to the developing world with fusion energy. It is still…
The continuing story of AI’s evolution
Research by Goldman Sachs claims AI will replace 300 million jobs in the next 15 years. The international Labour organisation says AI will enhance jobs rather than eliminate them. Time will tell. My particular interest is financial planning and I ask the following question regularly to test its progress. Here is the latest result. “I…
Microsoft’s co-pilot is not ready to take the controls.
There is little doubt generative AI like ChatGPT and Co-pilot are the future and I have been monitoring their ability to provide financial planning calculations and information. To do this I asked them the same question; I have $300,000 in my superannuation and will retire in 10 years’ time with only employer contributions on a…
Barbarians at the gate! The fall of the Employment empire.
In 2019 the Organisation for Economic Co-operation and Development predicted that automation technologies would eliminate 14% of the world’s jobs and radically transform another 32%. Then regenerative AI arrived (ChatGPT and its hordes). These new technologies are very good, and maybe better than most humans, at things like coding, research and writing. Here are some…
Applying for everyone’s job – “The Prompt Engineer”.
Nobody had heard of a prompt engineer a few months ago but today it’s the newest, hottest job around, commanding anything up to $1 million a year. So, what does a prompt engineer do? In essence, they ask AI (Artificial Intelligence) the right question to get the right answer. Let’s assume a financial planning firm…
How to win Lotto with quantum mechanics.
Let’s start at the very beginning, the “Big Bang”, also known as the “Singularity” or “the before and after”. At the “Big Bang” we were all one and it seems, may still be. Split a photon and separate them by any distance and they remain “entangled” – a change to one has an immediate effect…
Modern slavery
Is it better to own your work force rather than to rent it? “Slavery” is coming back. Most of us already have a slave or two like a vacuum cleaning robot, or an Alexa app that turns on your appliances and gives you information on demand. AI (Artificial intelligence) is going to give us an…
The real future of affordable and accessible advice (part 2)
A major part of financial advice is analysing and recommending a product. Can a robot do this? I asked ChatGPT3 (the old version of the new AI sensation) “what superannuation funds in Australia have a low cost and high performance” as well as “do a quantitative analysis on BHP shares”? The response in the…
The real future of affordable and accessible advice
QAR (Quality of Advice Review) is about making financial planning advice affordable and accessible to ordinary Australians. Qualified, licensed advisers have seen their numbers fall to nearly half as education and compliance requirements suffocate them and force up the cost of giving advice. According to Adviser Ratings, only 10.1% of consumers saw a wealth adviser…
The new “Manhattan project”
The CEO of OpenAI (Sam Altman) has compared his firm’s work on artificial intelligence to the Manhattan Project, where the first nuclear weapon was developed during World War II. Just like the warnings against the development of the atomic bomb, more than 2,000 tech experts and leaders across the world signed a letter calling for a pause…
You can’t have a robot in a meeting!
You can’t have a robot in a meeting! Seems you can and it will probably become common. Microsoft’s robot (Artificial Intelligence) will listen in on your Microsoft Team meetings, take minutes and suggest follow-up action. It can also scan inboxes, documents and spreadsheets to draft emails and presentations. You can (for example), ask it to…
Quo Vadis QAR?
Quo Vadis QAR? Michelle Levy’s Quality of Advice Review (QAR), seems keen to put the banks back in business flogging their products to trusting customers, with the only protection that the advice be “good”, rather than in the customer’s “best interests”. Will bank employees who thought their job was to help customers with their banking…
Will chatGPT eat your lunch?
According to Reuters, as of Feb 1, ChatGPT (the new AI robot on the block), reached 100 million monthly active users in two months after launch, making it the fastest-growing consumer application in history. It has passed law exams in four courses at the University of Minnesota and another exam at the University of Pennsylvania’s…
Why do people seek financial planning advice?
Most people assume we seek financial planning advice to help us achieve our financial goals, but the truth may be a little “darker”. I have often wondered why the percentage of people seeking financial planning advice remains so constant, despite scandals (like the Hayne Commission), onerous compliance requirements and a service that is costly, inefficient…
The good, the bad and the ugly
The QAR (Quality of Advice Review) is proposing that “good” financial advice be “good enough”, rather than following the current “best interests” rule. If the advice is reasonably likely to benefit the client, based on their circumstances at the time the advice is given, then it will pass the test. Following the banking royal commission,…
All companies will be IT companies
In the future, every company will become an IT company. Those who don’t will fumble on with a “Frankestein tech stack” giving them little or no advantage. According to Chad Brooks of Business.com, “The most successful and highest performing companies have little separation between their business strategy and their technology strategy. In short, they have technology as…
Mirror, Mirror on the wall
Mirror, mirror on the wall, what is the best product of all? APIs (Application Programming Interfaces) are the new “magic mirror”, opening up a wealth of information curated by someone else who maintains and updates the data. We use them regularly, “Hey Google, give me directions to Martin Place”. Financial services have been invited to…
Welcome to your new paraplanner
I work 24/7, 365 days a year without a salary. I communicate with natural voice and can do any financial planning calculation on request, as well as gathering client information and doing product research. I can even implement insurance applications. I remember everything and am not intrusive, only responding to verbal requests directed at me….
Why do people choose an adviser?
Conventional wisdom suggests we delegate to a financial adviser because they have the time and expertise to help us achieve our financial goals. The truth may be a little “darker”. It seems “Delegators” just need someone to blame if things go wrong. Michael Kitces, Head of Planning Strategy at Buckingham Wealth Partners had a good look…
Financial advice – its tough
Financial planning advice is a slow, expensive and, it seems, unprofitable business. Firstly, it can take weeks or even months before a comprehensive statement of advice is ready. Secondly, research conducted by KPMG and commissioned by the Financial Services Council found the average cost of providing comprehensive financial planning advice is $5,335 a client, while…
Digital assistants in client meetings
Would you use a digital assistant in a client meeting? I asked the question in a LinkedIn poll and got over 150 views but just 4 votes. Me and two close friends voted “yes” and one person voted “no”. So, I still don’t know. Finchat is currently going through the Amazon certification process for its…
Robots find their voice
Ever wondered why digital assistants are so good? It’s all about Natural language processing (NLP) – the science of programming computers to process natural language. It makes robots “more human”. Some serious resources are going into this science. GPT-3 (Generative Pre-trained Transformer 3) is a language model that uses deep learning to produce human-like text. Applying over 175 billion…
Will all advisers become cyborgs?
Humans are slow and expensive while robots are fast and cheap to operate. Unfortunately, robots can’t read behavioural cues like a human can and pivot immediately with high accuracy. Their algorithms just aren’t there yet. What we need is a cyborg adviser, “enhanced” to do what a robot can do while managing the emotional flow…
Who can give me investment advice?
Assuming you are one of the 80% of Australians without a financial adviser, where would you go for investment advice? In the old days, the minute the money hit your bank account the branch would swing into gear and the deposit would probably end up in a suite of bank products they hope will help…
All companies will be IT companies
“In the future all companies will be IT companies” was the throwaway line from a keynote speaker at an Amazon conference I attended. Will “people businesses” like financial advice become IT businesses? Can a robot do a better job? Firstly, the current financial advice process is slow and expensive. It can take months from an…
Will banks return to financial planning
Every bank left financial planning in the wake of the Hayne Commission leaving a lot of money on the table to remediate clients for poor financial advice. Have the risk/reward dynamics improved in such a short time to tempt them to return? Deloitte’s Mark Ryan remarked at the Stockbrokers and Financial Advisers Association (SAFAA) Conference…
Affordable advice – the Holy Grail?
According to Adviser Ratings, only 12.2 per cent of the population used an adviser in 2019, down from the year before. ASIC wants to know how Australians can find affordable, quality advice and issued Consultation Paper 332 to find out. Firstly, what is affordable advice? ASIC report 224 found on average, consumers believe initial advice…
Robo vs Human advice
An adviser needs to know their client, products and the law before giving advice. In theory a Robot can do all of this, much of it more efficiently and all of it cheaper. Theory is becoming reality. Finchat has a voice based financial health check. Quotacy has a voiced-based Life Insurance quotation system and investment…
Crypto – the new tulip bulb?
At the peak of tulip mania, in February 1637, some tulip bulbs sold for more than 10 times the annual income of a skilled artisan. Some have theorized that outbreaks of bubonic plague throughout the period caused folks to take chances they would not have ordinarily taken. Sound familiar? During the current pandemic stock markets,…
Rise of the robots
The real future of financial advice – Rise of the Robots I attended an Amazon conference where the key note speaker declared (somewhat tongue in cheek) that “in the future all companies will be IT companies”. He pointed to Uber and Airbnb who are not much more than a computer program and the market capitalization…
Robo wars
Apple, Amazon, Microsoft and Google have a combined market capitalisation bigger than the GDP of most countries. If they believe “voice” is the future then it probably is. Most of us use their digital assistants. We ask Apple’s Siri to call mum, Amazon’s Alexa to turn on the lights, Microsoft’s Cortana for the day’s schedule…
2021: an advice odyssey
Financial planners have used algorithms for ages. Financial planning software churns out advice documents, re-balancing algorithms keep asset mixes aligned to risk profiles and research software forms the basis of product recommendations. Why can’t we let clients access the software directly and reduce costs? Planning software is difficult to use and understand. Even financial planners…
Working remotely – the hidden benefits
The pandemic forced most advice firms into the safety of the “cloud” trying to keep their business alive. “Trying” quickly went to “thriving” and the Direxion Work From Home Survey found client relations and productivity were either unaffected or improved. Employees enjoyed the flexibility of working from home and owners could look at reducing the…
The future of advice – rise of the robots
I attended an Amazon conference where the key note speaker declared (somewhat tongue in cheek) that “in the future all companies will be IT companies”. He pointed to Uber and Airbnb who are not much more than a computer program and the market capitalization of Facebook, Amazon, Netflix, Google, Microsoft, Apple and Nvidia (called FANGMAN…
The return of Frankenstein
The burden of compliance together with the removal of conflicted selling has seen many dealerships look to tech for the efficiency needed to remain profitable. Should they develop their own tech stack or rely on an existing provider (or both)? Is it time for a new system built from scratch? Build your own “Frankenstein” The…
The real future of financial planning
The real future of financial planning [cherry_spacer size=”20″] Amazon’s Alexa [cherry_spacer size=”10″] I recently took part in an Amazon Alexa “hackathon” (a friendly “design” jamboree) that invited participants to “Invent the Next Generation of Alexa Experiences That Go Beyond Voice”. We were urged to create a skill that combines voice with rich sound, visuals, touch…
Working from home – or on your swing?
There is a theory that 20% of employees do 80% of the work. We all know the super-efficient workaholics who prefer not to delegate. What about the 80% doing 20% of the work and at home? Are they working on their golf swing? Research conducted by Croner (UK employment law specialists), found UK employees spend,…
Robo revolution
Immediate answers in a conversational format What is robo advice? Robo advice offers a low-cost alternative to financial advisors. They provide investors with advice about asset allocation, portfolio construction and tax reporting. Users complete an online questionnaire about their investment time frames and ability to handle investment risk and algorithms construct asset allocations based on…
Open banking
New technologies for financial planning – Open banking What is open banking? Open banking allows some customers to securely share their banking data with third parties that have been accredited by Australian Competition and Consumer Commission (ACCC). These would typically be other banks who are automatically accredited and fintechs who need to apply. It is…
Artificial intelligence and big data
New technologies for financial planning – AI [cherry_spacer size=”20″] What is artificial intelligence (AI)? Artificial intelligence (AI) is human-like intelligence that appears to learn, reason, plan and perceive. At the heart of AI are algorithms which are rules like; “if this condition is true then execute the following instruction (code), else execute some other instruction.”…
Blockchain and cryptocurrency
New technologies for financial planning – Blockchain What is blockchain? Blockchain at it’s simplest is a database. It is a very big database, housed on a powerful server which itself can comprise thousands of computers. A blockchain database A blockchain database is a collection of “groups”, known as blocks, which contain information. This system makes…
S-I-P as-a-service
Cloud services on demand
The internet of things
New technologies for financial planning – IoT [cherry_spacer size=”20″] What is the internet of things? The internet of things are all the “things” (devices) that are capable of connecting to the internet and communicating. These “things” are often called “smart devices”. They often communicate and share data without human intervention. An example would be your…
5G
[cherry_row] New technologies for financial planning – 5G [cherry_spacer size=”20″] What is 5G? [cherry_spacer size=”12″] 5G is the 5th generation of cellular networks. It promises to “super charge” our smart devices by providing a faster network able to move much more data, quicker. [cherry_spacer size=”12″] It will allow “real time” communication between devices of the…
Virtual reality
New technologies for financial planning – Virtual reality [cherry_spacer size=”20″] Virtual and augmented reality Virtual reality completely replaces the user’s real-world environment with a simulated one. Augmented reality is mixed reality – a combination of real and virtual worlds. The ever-increasing computer power coupled with 5G’s ability to transfer large amounts of data very quickly…
Rise of the robots
New technologies for financial planning – Robots Rise of the robots Robots are seemingly intelligent machines that perform tasks autonomously. Robots have been around since the 1950s and have grown steadily more competent and robust. Leveraging off ever-increasing computer-power, artificial intelligence, big data and the “internet of things”. Robots today can run, jump, deliver goods,…
Cloud computing
New technologies for financial planning – Cloud computing What is cloud computing? “The Cloud” is a collection of servers, networks, storage facilities, development tools, and applications (apps) delivered through the internet. Businesses can access these “cloud” services saving them the cost of servers, engineers, programmers and related staff. The Cloud can store and make…
Trading in the 4th Industrial Revolution
The stock market in the “4th Industrial Revolution” Automated Trading An automated trading system allows specific rules to trigger trades automatically. An investor tells the platform when to buy and when to sell. Around 80% of shares traded on U.S. stock exchanges come from automatic trading systems. This means the system has to be robust…