“It wasn’t chasing alpha or better investments that gave better returns. It was actually about having a plan and sticking to it,” Madej says. “And with the ongoing demographic shift of wealth to more women, younger people, and more people from multicultural backgrounds, we see planning and advice coming to the forefront in all aspects of financial service.”
As more and more people get financial plans, Madej says wealth firms will be able to accumulate a rich database of plans across a large sample of client segments. Over time, they’ll be able to get information showing which strategies and approaches proved most fruitful in the long term.
By having AI and machine learning programs comb through the data, firms should be able to get the answers to crucial financial planning questions – whether it can be a wise long-term decision for someone at a certain age to take money out of their RSP to put a down payment on a house, for example.
“You’re going to need millions of cases’ worth of data, data analytics, and probably some AI to tell you exactly what is the right age and family situation, where you would want to make a withdrawal from your RSP,” Madej says. “I think it’ll take 30 or 40 years before we can get the data we need to get good answers to some of the more complex financial decisions clients will need to make during their lifetime.”
With well-trained AI and machine learning algorithms at their fingertips, he believes advisors will have additional strategies to refine their plans and increase the chances of successful financial outcomes for their clients.
