Is Hybrid Advice the Future?
In his 2018 book, ‘Crisis 2038: A Novel’, Gerald Huff shares his view that “In the coming decades, for the first time in history, we will be able to make and buy a huge variety of goods and services without the need to employ people.”
This may be dismissed as a dystopian prophecy intoned through a sci-fi novel, but in fact it’s actually happening in our lives right now and we experience it every day: Online shops have replaced physical retail space; travel agents have been rendered redundant because of the surge in digital directories and booking sites; even accountants are being outpriced by more affordable tax software.
And it’s not just a fictional writer who shares this view. Alongside countless economists and technology experts, in 2020, The World Economic Forum (WEF) concluded that “a new generation of smart machines, fuelled by rapid advances in artificial intelligence (AI) and robotics, could potentially replace a large proportion of existing human jobs.”
So, should we all be fearful of our careers? Will the services and goods that we value be wiped out or changed beyond recognition?
The truth is, change and innovation have shaped the way we live since time began: Horses and carts were replaced with freight trains and articulated lorries, increasing speed and profitability; the printing press replaced the arduous task of hand writing books, providing the joy and power of reading and education to the masses; the invention of the compass in the 1300’s put paid to astronomical guess-work and provided a safer, more reliable way to travel. The list really is endless!
So, should we really fear change, when our species have been benefiting from innovation for thousands of years? And what has this got to do with financial services?
In the last decade, technology has played a huge role in financial services. From intelligent back-office systems right through to widely available ‘robo-advice’ solutions, AI, computers and software programs have helped to boost efficiency, accuracy and save time and money. In some cases, technology has also made finance far more accessible to a much wider range of people; however, this does not mean that the human touch is no longer needed.
In essence, the role of a Financial Planner is to provide empathy, build trust, and develop a deep understanding of their client’s needs, whilst offering expert guidance, support and creative solutions. Whilst it would be remiss of us to say that AI will never be able to provide these elements, generally humans like to work with other humans and be heard and understood by real people, especially when we have big, life-changing decisions to make.
For many people in our industry, a hybrid approach to financial planning would be the ultimate dream. If a computer can take on the burden of administration, producing documentation and ticking compliance boxes, the human Financial Planner can focus on relationships and conversations. This would not only mean that time and costs could be saved, but also the role becomes more about experience, knowledge and passion- not paperwork.
For the client too this model could be highly beneficial. If forms, plans and all other correspondences are digitalised, their completion and return will be far more efficient and less of a drain on their time. More importantly, there will be far more control and transparency, with clients able to action things like ISA top-ups themselves, but seeking ‘human’ guidance for more complex decisions when needed.
The ‘rise of the robots’ may seem like a terrifying concept, but it could also be the greatest gift we could be given. Change and innovation can transform our lives for the better, and anything that can give us more time, more profit and more freedom to pursue the things we love, is a massive stride forward in our book.
Setting Your Kids Up for Success
I am a firm believer that schools should be educating children on the real ‘truths’ of life: why it’s important to save money, how to afford your first home and how to reduce the risk you take with your money. But if schools are only just starting to adopt this style of education, should you be setting your kids up for success yourself?
By teaching your kids how to manage their money now, you will be giving them a valuable gift. Learning how to budget, save and ultimately grow their money now, will set them up for future financial security (and could mean that ‘the Bank of Mum of Dad’ could become a concept relegated to the history books!)
In adult life we all understand that we have to pay our mortgages, utility bills, tax bills and various other ‘non-negotiables’; however, it can be a shock for our kids when they first move out and suddenly receive a Council Tax Bill or unexpected charge for water. The key here is to be open and transparent with your children about what bills, and costs come out of your bank every month, so that they can understand, ideally from a young age, how much things cost and why it’s so important to set aside money for essentials.
Money is important in terms of paying for essentials such as food, shelter and heat, but it can also be fun and rewarding too. Encourage your children to sit down and think about something that they really want- whether that’s a new toy, a trip or even their own freedom in the shape of their first flat. Using a visual chart, that tracks amount saved and time to go until they reach their goal, will help to keep them motivated and excited about the reward they are getting closer to each day.
Rewards and Penalties
It is important that your children understand that their hard work, or lack of, can result in either a reward or a penalty. You can achieve this by giving your children pocket money for chores that they do around the home, so that the harder they work, the more they can earn. If you really wanted to teach your children a valuable life lesson, you could even ‘dock’ their pocket money for sub-standard work, but equally it’s important not to demotivate them too much! You could also consider giving your children an ‘earnings statement’ each week, so they can see how their help has paid off, instilling a huge sense of achievement.
The sooner your children actually start using banking apps or accounts, the more they will understand how money works. There are plenty of free online resources, such as games that teach children about money and some banks now run live virtual workshops, geared specifically towards children under the age of 16.
Efficient Portfolio also have our own free resource called ‘SMART Money’. Written for those just starting out in their financial journey the book empowers people to become free enough to stop work and live out their hopes and dreams. You can download your free copy here: https://www.efficientportfolio.co.uk/smart/
Educating your children about money is crucial to their overall financial security and future success, so the sooner you start, the better off they will be.
The full stamp duty holiday came to an end in July, but homebuyers can still benefit from reduced rates.
People have been saving money thanks to the temporary scheme that was introduced because of the coronavirus pandemic.1
Homebuyers have saved thousands of pounds in stamp duty.
The saving was designed to boost the property market which almost came to a standstill when the pandemic first hit.
At the beginning of the crisis, property prices fell for the first time in eight years and the housing market stalled.
But house prices rocketed once the tax break was introduced, with buyers scrambling to save thousands of pounds before the deadline.
Even though the full holiday has now ended, the scheme is being phased out and ends on 30th September 2021. The stamp duty rate will then return to its normal limit at £125,000 from 1st October 2021.
The Life Legacy Gift
Death: an incredibly delicate topic, but one that will affect us all. So are you prepared? Will you be able to leave a lasting legacy for your loved ones? And, more importantly, will you be able to fully enjoy your final years?
The ultimate eventually of death is something all of us must face, yet few of us feel equipped to talk about. There are many considerations to make, ranging from the practicalities and administration following someone’s passing, through to leaving a legacy, both in a financial and in a more emotional sense. But where should you start?
From my experience, most of us have two key aims in life: firstly, to give ourselves the best life we can; and secondly, to also create a better life for the people we care most about. At Efficient Portfolio, our overriding ethos is that we want to ‘help people create a better future through inspirational financial planning’, and by that we mean for our clients, our team and our industry. I am sure you are no different; you want to create a better future for yourself, your family and perhaps also your community or industry too.
To help you achieve these aims and more, we have recently published our fourth book called ‘The Life Legacy Gift’. In this book we will show you the practical steps you can take to make this time as painless as possible for your loved ones. We will also provide you with the strategies you can implement now, so you can not only leave a lasting legacy, but live a fulfilled and rewarding life.
The Life Legacy Gift is a way of inspiring you, so that you can consider how to give your life the meaning it deserves, as well as ensuring that you live on beyond your death. The end of your life is a delicate and of course upsetting prospect, however understanding how to make that time as painless as possible for you and your loved ones is crucial, whilst achieving the happy balance of enjoying your life in the here and now. This book It is about leaving a legacy: a gift to those people you care most about.
Life only has context and meaning because of death. But this book isn’t just about your demise; it it’s actually about making the most of life, both now and for generations to come.
Charlie’s Mini Blog
If Dr Sinclair (see book recommendation) is correct in the sense that aging is a disease that we can learn to beat like any other, this could have a huge impact on the way we live our life.
If aging can be slowed or even reversed as he suggests, from a health perspective our society could save literally billions of Pounds from no longer needing to treat other diseases, as many are caused by the aging process. The quality of our later lives could be vastly improved, and our professional lives would also likely change; switching careers maybe several times during our lifetimes, with career breaks rather than hard slog followed by retirement.
From a financial point of view, if we start living beyond 100 (and maybe even 150 in the not-too-distant future), the way we manage our money will also need to change; certainly, lifetime cashflow forecasting will become even more important to ensure you don’t have too much life at the end of your money!
When science and society treat aging as a disease, it has the potential to have a massive impact on so many aspects of our lives, so I encourage you to read his book, consider the actions you can take to extend your own life whilst improving the quality of that life too, but also give some thought on how you can live your life differently, if indeed we can extend our years into the 120’s and beyond!
This week I have finished an absolutely fascinating book called Lifespan: Why We Age - and Why We Don’t Have To by Dr David A. Sinclair. Acclaimed Harvard Medical School doctor and one of Time magazine’s 100 most influential people on earth, Dr. David Sinclair reveals that everything we think we know about aging is wrong, and shares the surprising, scientifically proven, methods that can help people live longer.
It has made me rethink aging, and whilst he doesn’t give advice, Sinclair does share what he himself does to minimise aging. Drawing on his cutting-edge findings at the forefront of medical research, Dr Sinclair provides a scientifically proven roadmap to reverse the genetic clock by activating our vitality genes, so we can live younger longer. As a result of reading this book, I am looking forward to seeing in the 22nd century at the ripe old age of 123!