Technology in Wealth Management

I recently re-watched Apollo 13, the classic movie about the ill-fated 1970 mission to the moon and the teamwork required by Mission Control to bring the crew safely back to Earth. In one scene, Tom Hanks’s character needs Houston to verify a calculation because the command module’s computer has stopped working. To ensure accuracy, the entire front row of mission controllers re-calculates the equation with the appropriate technology of the day – slide rules.

Flash forward to today, NASA conducts missions with technology that is leaps and bounds ahead of the tools used in the Apollo missions. For reference, the Apple Watch 6 has one million times the processing power of the computer used in the Apollo command module [1]. NASA using more advanced technology does not make space exploration any less important. Rather, it allows astronauts to focus more of their time on the high-value items – the scientific experiments and discoveries performed in space – while allowing technology to take more of a lead on the operational aspects of spaceflight.

While nowhere near as exhilarating as rocket launches and space exploration, the wealth management industry has also undergone tremendous technological improvements over the past several decades. Following last year’s introduction of ChatGPT, much has been written about artificial intelligence and the impending “doom” it will cause for many industries, wealth management included. It remains to be seen what the future holds, but we continue to view technology as an indispensable tool, not the entire solution.

The technology we use at Regent Peak helps accomplish several objectives. Some technology, such as video conferencing, electronic signatures, and our data vault, increases the speed and flexibility with which we can interact with our clients, allowing us to meet, sign documents, and safely exchange secure information regardless of geography.

Other technology, such as our financial planning software, helps us efficiently model complex scenarios with large amounts of interwoven variables. As a hypothetical example, if a client is considering increased spending in retirement, higher income from IRA distributions could impact the taxes levied on Social Security. Similarly, our investment management software allows us to analyze asset allocation and exposures from multiple angles to ensure our clients are invested appropriately for their given risk tolerances and objectives.

Does the introduction of better technology mean the advice of a financial advisor is less valuable? We think the opposite. Our clients don’t hire a wealth advisor to transpose data into a spreadsheet, and investment returns do not magically increase when calculated by hand versus software. Our clients want the noise and complexity of their lives translated into advice for the best path forward, and technology helps us spend more time crafting solutions with our clients, not gathering the information to begin with.

Chess has been a traditional testing ground for computers and artificial intelligence. This application has led to several man vs. machine competitions through the years between the latest computer and the grand masters of the era. Notably, neither the computer nor the grand masters have proven to be the consistent victor. Rather, the highest performances have been produced by a combination of man and machine, benefiting from the computer’s near instantaneous evaluation of hundreds of potential moves and ramifications which inform the player’s intuition and final decision making [2].

To us at Regent Peak, the future of wealth management feels very similar. There are surprisingly few questions in personal finance and investing that have black and white, yes or no answers. Similar to law, accounting, and other professions, the most common answer is “it depends.”

It depends because we as humans are unique, each possessing different nuances in the ways we view the world. What may be viewed as an acceptable tradeoff for one person may be apples-to-oranges for another. What may be the “correct answer” may keep someone from sleeping at night. At the end of the day, the best advice may not be the most technically correct but the approach one can get most comfortable with.

At Regent Peak, our wealth advisors are here to help you find the right decisions for your financial life, and we strive to use cutting edge technology to better set you up for success. Let’s start a conversation today.