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Robot (Photos.com)
Robot (Photos.com)

Preet Banerjee

Say hello to your electronic financial adviser Add to ...

A few years from now, your annual financial planning review might take place on your tablet device.

Instead of waiting for a follow up meeting, you might get your recommended action plan instantaneously, including a set of trading instructions that you can send to your discount brokerage where with the click of a button, you will re-balance your portfolio. And the whole process might take place in the absence of any other human involvement.

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The rise of the electronic financial adviser is upon us.

For new clients, a financial plan is rarely complex. An analysis of insurance needs, investment policy statement, and a short term savings or debt reduction plan is usually what’s dispensed (if that).

If you boil it down to the basics, it’s an “input-output” process. Gather all the financial information of where a person is today, and where they want to be in the future, and create a plan to get them there. A questionnaire can identify any holes in their finances, such as a lack of wills and powers of attorney, insurance, emergency funds, etc.

Many financial planners use software programs to input all the variables and then tinker with planning variables to create a workable plan. If a client wants to spend $20,000 on a home renovation in two years, they can save up for it in advance, or finance it. Either is simple to model with today’s financial planning software. A risk profile questionnaire is often used to determine which single, turn-key portfolio fund is appropriate for investment goals.

Quite frankly, the front-line, entry level financial adviser is easily replaceable by software.

We’re starting to see this transformation in Canada, but other countries around the world are way ahead of us. Just take a look at the concept behind MoneyVista, where full blown financial plans can be created online. You can tweak the variables yourself to see what would happen if you got a raise, or if you had an unexpected large emergency purchase to make, and how that would impact your retirement date.

There will always be a place for expert - human - advice, especially with more complex estates. But for those just starting out, everyone might soon have the same electronic financial adviser named HAL, Siri, or Penny.

Follow on Twitter: @preetbanerjee

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