The Future of Financial Planning: Trends and Predictions

I get asked this question fairly often (often enough for me to pen down something before the year ends) - "What do you think are the trends of where your financial planning industry is headed next?" - so just thought to pen down a few thoughts on this.

Since the inception of the concept and job function in the 1950s, financial planning has advanced considerably. The industry has drastically changed to fulfill consumer needs as a result of technological advancements and the complexity of the financial markets. Here are some developments and trends for financial planning in the future:

1. Higher levels of automation and digitization

In the upcoming years, financial planning is going to become more digitalized and automated. This implies that a lot of previously manual chores, such tax planning and portfolio rebalancing, will now be carried out automatically by software. While doing so may save time and lower the possibility of mistakes, some financial advisors may lose their jobs as a result.

2. More emphasis on goal-based planning

Financial planning has often emphasized asset accumulation and wealth maximization. Aspirations-based planning, on the other hand, is becoming more popular because it takes into account a person's values and personal goals. With this strategy, the significance of integrating financial goals with non-financial objectives—such as pursuing a rewarding career or spending time with loved ones—is emphasized.

3. Use of machine learning and artificial intelligence

Financial planning already makes use of machine learning and artificial intelligence (AI) to evaluate vast amounts of data, streamline processes, and to some extent, provide recommendations. Financial planners may be able to offer more individualized and precise advise in the future as these technologies grow more widespread and advanced.

4. Increased significance of education and financial literacy

It's critical for people to have a solid foundation in financial literacy as financial planning grows increasingly complicated and technology-driven. This involves being able to manage the increasingly complex financial landscape and comprehending fundamental financial ideas like saving and investing. The importance of financial education may increase in schools and other educational institutions, or it may be taught online or through other resources.

5. Greater fusion of financial and other aspects of life planning

Planning for finances will become more linked with other aspects of life, such as relationships, profession, and health. For instance, financial planning may entail assisting clients with making plans for future medical bills, navigating employment changes, or arranging for future family events like weddings.

In conclusion, it is likely that growing automation, an emphasis on goals-based planning, the use of AI and machine learning, the significance of financial literacy and education, and a stronger integration of financial planning with other facets of life will define the future of financial planning. These changes will provide financial planners and their clients both possibilities and challenges, but they will eventually contribute to the improvement of people's and families' financial security.

What about the role of a human financial planner in future?

There will always be a need for human financial advisors, even as the process becomes more digital and automated. Although technology is effective at handling many duties, it cannot replace the human touch and connection that are so crucial in financial planning.

Human financial planners are adept at establishing rapport and trust with customers, comprehending their particular financial objectives and situation, and offering tailored counsel that takes into account their particular requirements and preferences. In times of ambiguity or disaster, they can also offer support and direction and adjust to changing conditions.

Human financial advisors can also bring a wealth of knowledge and experience to the table and offer insightful analysis and perspective on challenging financial matters. Additionally, they can offer knowledge and resources to customers so they can make wise financial decisions while also assisting them in navigating the financial world.

In conclusion, human financial planners will continue to be an important resource for individuals and families looking for financial assistance and support, even though technology will undoubtedly play a bigger part in financial planning in the future.