• Prioritisation across multiple needs (given my stage in life, dependents and situation what need areas are important to me in which order?).
• Household-based needs planning including partner and dependents.
• Current portfolio risk assessment (how is my portfolio currently allocated in which products, which asset classes and which costs and features?) What risk does this represent?
• Customer attitude to risk and capacity to take it, in the context of goals or objectives (what is the risk that I am willing and able to bear to achieve my objectives?).
• Asset allocation strategy (what is the right investment mix to give me the best chance of achieving my goals at a suitable level of risk?).
• Risk based forecasting (what are the range of returns I might achieve if I invest X, or how much do I need to save in order to achieve my goals, when might I achieve my goals?).
• Portfolio tracking, rebalancing alerts and auto rebalancing (what course corrections do I need to take in order to achieve my goals?)
Level 3: Execution:
• Investment selection and portfolio construction (which set of specific investments in which combination will stand the best chance of achieving my strategy at a suitable cost and risk?).
• Which product or products to invest in or divest from, in which order and when.
• How can I maximise the benefit of tax and product features to achieve my goals and objectives and enhance my financial security?
Flying high
In his book Cockpit Confidential, author and veteran air pilot Patrick Smith, wrote: “One of the most stubborn myths in all of aviation is this notion that pilots just sit there while the plane flies itself from City A to City B. It’s infuriating to know that people believe this, because it’s utterly false. Airplanes do not fly themselves. The crew flies the airplane through the automation.
“A plane cannot fly itself any more than an operating room, with all of its advanced technical equipment, is able to perform an organ transplant by itself. The equipment makes things easier, but the operation itself is controlled by humans.”
Is it feasible for a client financial plan to be constructed which gathers all of the necessary data, constructs a flight path from Level 1 to Level 3, through a life time accumulation of assets and then a glide path through their decumulation?
With Watson-like investment and lots and lots of data and training, the answer is yes, absolutely.
But how likely is that the automated advice emanating from a machine would be acted up on by either planner or customer? Probably not a hope.
