Tessa Lee, managing director of adviser fintech support firm Moneyinfo, looks at how Financial Planning can be transformed in the coming years by AI.

The year is 2034, and Financial Planner Penny Wise wakes up to Alexa’s soft chimes. After a quick glance at the morning news on her smart mirror, she heads to her London office, a sleek, solar-powered building in the heart of the city.

1. An AI assisted morning routine

Penny grabs a cuppa and reviews her AI dashboard which has highlighted key meetings and related documents, generating insights for clients Penny is due to meet. She adjusts the plans based on her knowledge of each client's unique circumstances. This blend of machine efficiency and human intuition means Penny is ready for the day ahead.

2. Hyper-personalised budgeting

First client, James, is a young professional struggling with student loans, a mortgage, and saving for the future. Overnight, Penny’s AI-powered budgeting tool has analysed James's spending habits, income, and financial goals, producing a tailored budget. Penny reviews the suggestions. "James, cutting back on takeaways could save you quite a bit each month,” she begins. “The AI suggested reducing your travel budget, but I know you commute daily. So let's adjust that and find savings elsewhere."

Together, they tweak the AI's recommendations to better fit his lifestyle. James leaves the meeting with a customised plan that balances AI efficiency with Penny's personal touch.

3. Predicting market trends

Next up is Sarah, a long-term client with a complex investment portfolio. Penny’s AI-driven predictive analytics tool has projected a downturn in the tech sector but sees promising growth in renewable energy. Penny examines the AI's forecasts in line with Sarah’s risk tolerance and investment history. "Sarah, based on the latest analysis, I recommend reallocating some of your investments into green energy," she advises. "The AI suggests 20%, but I think a 15% adjustment would be more appropriate for your risk level."

Sarah nods, impressed. The predictive insights improve Sarah's returns and reinforce her trust in Penny’s expertise.

4. Transforming client support

As Penny finishes her meeting, a notification from the AI chatbot integrated into her client portal pops up. A client has a question about their pension contributions, and the chatbot has provided a real-time response. It’s good at handling routine questions, so Penny can focus on more complex client conversations. Later, during a meeting with Emma, Penny can focus on her client’s long-term needs. "The chatbot was really helpful with my ISA options," Emma observes. 

5. Tailored plans for every client

That afternoon, Penny meets new clients Rohan and Alisha, a couple planning for their children's education and their own retirement. Her AI-powered workflow schedules the Teams meeting and automates information collection so Penny is well-prepped. It also records and transcribes the meeting allowing her to focus on getting to know her new clients. Following the meeting the AI produces notes and a detailed fact find. In minutes, it creates a highly personalised financial plan based on the couple’s current situation, goals and risk profiles. Penny reviews this plan and adjusts the suggested level of pension contributions to allow for their desire to travel more, before approving it to be sent via the client portal.

A perfect partnership

As the sun sets over the Thames, Penny reflects on her day. AI has not replaced her; it complements her, allowing her to focus on building relationships with empathy and expertise. Financial Planning is still deeply human, but it’s hugely more efficient. With AI handling the heavy lifting, Penny can dedicate more time to her clients. The perfect blend of technology and the human touch.

Tessa Lee is managing director of Moneyinfo, a fintech firm based in Warwickshire, specialising in client portals and mobile apps for the wealth management industry. She has more than 20 years’ experience working in financial advice and fintech and holds several CII Financial Planning qualifications.

https://www.moneyinfo.com/

@moneyinfotech 

With so many other challenges facing the wealth management sector, from legacy technology to developing compelling products and services, why are firms turning their attention to complaints?, writes Kate Monserrate, co-founder of advice and wealth management business consultancy Simplify Consulting.

Pensions expert James Jones-Tinsley reviews the election result and its impact on the pensions landscape. 

What has surprised me most about the outcome of yesterday’s General Election is not the much-predicted Labour landslide victory, but how well the smaller political parties have fared, largely at the expense of the Conservative Party.

At the time of writing, the Green Party have 4 seats, the Reform Party have 4 seats, a number of Independent candidates – including Jeremy Corbyn – have gained parliamentary seats, and while the Scottish Nationalist Party’s hold over Scotland’s political landscape has been reduced to single figures, the Liberal Democrats have secured their best result since the 1920’s.

The Labour Party faces a tough inheritance on many fronts.

Where pensions are concerned, arguably the top priority is to finalise the outstanding legislation in connection with the abolition of the Lifetime Allowance, which was cut short when the former Prime Minister, Rishi Sunak, decided to go out into the pouring rain without his umbrella and call the election.

The Labour manifesto speaks of a “review of the pensions landscape”; a broad-brush statement, with no time limits attached.

However, given that the incoming Chancellor, Rachel Reeves, has stressed which taxes she will not increase, one wonders if an emergency Budget in the near future might focus on the ‘low hanging fruit’ that pensions offer the new government, in their bid to raise funds from elsewhere?

Firstly, pensions tax relief, which currently costs the government over £40 billion each year, could come into view. The last nine years have seen reforms to pensions tax relief discussed at many junctures, but to date, individuals can still obtain pensions tax relief at their highest marginal rate of income tax.

An incoming government with a significant majority will always deliver bad news to the country early on in their tenure, and so expect reform of pensions tax relief; potentially a move to a single percentage rate of relief for all individuals, regardless of how much income tax they pay. If this was as low as 20%, it would save the government billions of pounds each year, at a stroke.

Secondly, the tax treatment of pension death benefits for those individuals who die below the age of 75 could be up for review. The ability to pass on these benefits to surviving recipients free of income tax for the rest of their lives has been criticised by think-tanks including the Institute for Fiscal Studies as “overly generous”, and so a move to impose the payment of income tax on these pre-age 75 distributions would undoubtedly be tempting to a new government.

Thirdly, Inheritance Tax (IHT) was not included in Ms Reeves’ list of taxes that will remain untouched, and one wonders if the current exemption from IHT that trust-based pensions enjoy, may be under threat. I sincerely hope not, as the ability to pass on pension death benefits to surviving beneficiaries via the discretion of the trustees of the pension arrangement, without the potential imposition of IHT on those benefits, is a powerful benefit for those recipients who are arguably at their most vulnerable.

Fourthly, maintaining the ‘Pensions Triple-Lock’ for annual increases to the State Pension.

Yes, the Labour manifesto stressed they would maintain this promise, in order to secure the pensioner vote, but its affordability over time will only increase, and so I fully expect the new government to call for yet another review of increasing the State Pension Age to 68 and beyond, far earlier than is currently set out in legislation.

James Jones-Tinsley FPMI APFS is a Self-Invested Pensions Technical Specialist at Barnett Waddingham LLP

Almost half (49 per cent) of Paraplanners believe that their roles are "poorly defined", research from the Lang Cat consultancy has shown, writes Chartered Financial Planner and Paraplanner Judy Tennant.