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The world of financial planning and wealth management has been heavily impacted by technology. The advent of mobile devices and cloud computing has ushered a more scientific and mathematical approach to financial planning. This is now within the reach of not only large firms, but also smaller independent advisors. This is also now within the reach of the end consumer, either directly or through their wealth manager or advisor.
So how does the Finance Industry currently do Financial Planning?
In trying to predict the future some tools just use a mathematical formula that arrives at a number, and some use probability theory to predict a range of outcomes.
In the world of technology, it is hard to know good from bad. But the consequences for both the client and their advisor (or wealth management firm) of choosing the wrong approach can be disastrous.
This is why, up until now, it has proven difficult to formulate a model or algorithm that safely predicts the future of stock markets, interest rates and inflation. What is also usually overlooked is that we are all individuals with different chances of living a long life. We also have to now plan for a slow ignominious decent into the world of either dementia or long term care when we get old. And none of us know when we are going to die.
So to model for changing economic environments, changes in longevity, as well as how well your investments are going to do is tricky, but not impossible. I am working with a product called Envizage whose methodology has been used to manage over a trillion dollars of wealth, and has the answer to this tricky issue.
If we can replace the dangerous tools that are out there, that only consider a small part of the picture and thereby distort the big picture, we will be well on the way to a number of things:
I believe that approaching Financial Planning in this way will be the future- Future Planning if you like. All the Financial Authorities are going to be testing outcomes not process in the future. All Consumers are going to want to engage with Financial Firms that help solve an issue, not sell a product- You all know who you are!
This is the future, and it is here now.
HMU – I believe is what the hipsters say!.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Hassan Zebdeh Financial Crime Advisor at Eastnets
08 October
Jelle Van Schaick Head of Marketing at Intergiro
07 October
Kuldeep Shrimali Consulting Partner at Tata Consultancy Services
Nikunj Gundaniya Product manager at Digipay.guru
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