How AI will help with financial planning – Part one


Artificial Intelligence (AI) applications are evolving at breakneck speed, leaving us with a near-impossible task to know precisely where this may lead.

However, current trends hint at what is coming and one area that we confidently expect to see rapid developments is with cashflow modelling.

Existing models are already advanced, in the sense that you, as an individual plotting your financial future, can use these to map your future income and expenditure flow.

Working with us, we can, together, use the projections provided by the models to better understand “what happens if?”

In other words, we take your financial position as it currently stands, and add all sorts of future assumptions, running different scenarios, to see how this alters the map of your future.

This allows us to highlight risks, especially in relation to scenarios where you may run out of money or not have enough income to pay your future expenditure.

So, if these models already exist – what advantage will AI versions of such models bring?

Presently, the models are sophisticated number crunchers to produce future “pictures” or figures of your financial position at a later date.

The word ‘model’ is incredibly important, because they predict nothing, they just answer the “what if?” question.

What will change in all likelihood is that future versions, using AI, will introduce probability factors, predictive elements that may tell us what to expect, so they can answer how likely is it that X or Y will happen. What are the chances of this model being correct versus that model? They will do this by plotting patterns based on historic data, current trends or complex measurements of possible future outcomes.

In a way, they will move beyond the pure number aspect that is the heart of current modelling and start to explore the wider world aspects. This is the “intelligent” angle, the new models will bring with them a significant added assessment of the future, an intelligent predictive element.

This is already happening in other circles, for example, Institutional Finance businesses, managing billions of pounds, are already using AI programmes to make such predictions within finance markets.

Maybe we need to start thinking about this a bit like having our finances being run by an auto-pilot, that has been programmed to get where we need or want to go to, efficiently, safely, and with limited human intervention.

We are certainly living in interesting times, and in our field, personal financial planning, it looks like this sort of AI tool will simply help us to help you better than ever. We will keep you posted!

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