The rapid evolution of artificial intelligence (AI) is set to revolutionize wealth management, reshaping how financial services are delivered and experienced.
From automating routine tasks to offering highly personalized financial advice, AI has the potential to transform the way wealth managers operate.
I had the opportunity to sit down with Ian McKenna, Founder and Director of the Financial Technology Research Centre (FTRC), to explore the profound evolution of technology over the past 20 years. I also put him in the hot seat to speculate on the transformative future of AI, automation and quantum computing, looking ahead to the next 20 years.
McKenna shares his thoughts on the acceleration of change, likening the pace of AI's development to "internet years" and emphasizing the potential of AI to revolutionize all industries, including wealth management. He also touches on the broader societal impacts of AI, including its role in reshaping work, wealth, and even health. Click on the video to watch the entire interview.
Transcript:
Suleman Din: Thank you for joining me, Ian McKenna. I’m a big fan of your analysis and I think you're one of the few people in the industry uniquely qualified to ask the answer to a very open-ended question about the future.
Just think about how far we've come in 20 years, as we are marking the 20th anniversary of T3. We've gone from scanners, paper management and in-house servers to AI and automation at another level, with quantum computing not far off.
So I wanted to ask you: What will they think of next, really, when you think about the direction of where we're heading?
Ian McKenna: Firstly, thank you for those very, very kind words. I'm not sure I deserve them, but it's very kind of you to say them. I think it's perhaps the perfect point at which to ask that question as well. You know, 20 years from now, I've actually been doing some work – if you remember, back around the turn of the century, we used to talk quite a lot about internet years, and an internet year was equivalent to like seven normal years. So you'd get the acceleration in what happened on the internet in one year that typically would happen in seven.
I've been kicking around a theory that we have a similar situation with AI, only it's a bit different in that an AI month is equivalent to about two normal years. So, if you look at all the things that are happening with generative AI in 2023, there's a couple of decades of change in any way that we're moving.
So it's truly, perhaps, a cliche but, you know, a mind-blowing question at the moment. Where will we be in another 20 years? Because I think we're seeing change in a single year now that you would normally see in a generation or more. We could be in the equivalent of 20 generations forward in 20 years, especially when you start bolting quantum computing on top of generative AI. If you look at the point that we go, we achieve super generative intelligence, so the point at which the machines become smarter than us. Apparently, in recent weeks, both Elon Musk and Ray Kurzweil agreed it will be 2029, but someone at DeepMind said, no, they think it's 2028.
So we're really hitting a huge transformation in humanity. I think if we look back over the last 20 years, if we'd had this conversation in 2004, and one of us had suggested to the other that by now people would be taking pictures of their entire life and plastering it everywhere, that everybody would be walking around with an unbelievably powerful mobile device that absolutely runs every element of pretty much most people's lives.
I mean, my sort of mantra for the advice community for this year is to achieve a financial plan on every phone by 2025. I think that's a real objective. If you go back to Bill Gates and the 30th anniversary of Microsoft, he and Paul Allen had an objective of putting a PC on every desk and a computer in every home.
But we've gone way, way beyond that. I think where we will be 20 years from now is we will use incredibly smart technology to feed up everything we need to know before we even realize we need to know it.
When you get into quantum, we will have the ability to answer questions that our brains can't even comprehend. As we are now at the cusp of the fifth industrial revolution, where the issue is no longer what you know; the issue is actually how well can you frame the question so that your artificial intelligence or potentially artificial super intelligence can then go back and bring in all this amazing information.
Din: It's such an important point where the emphasis isn't on execution, it's on, that cognitive exercise of envisioning and broadening or tailoring the idea that you want. You have to be so specific. It's not where serendipity will hit me and I'll fill it out. No, you have to, at that very moment, exercise your mental acuity to create in your mind the product that you want to see. I think that will fundamentally change wealth management.
McKenna: It'll change wealth management. It'll change everything. We are now in a situation where advice firms using AI will replace advice firms that don't use AI. That's a given. Or the other way of looking at it, you don't have to use AI, but the firms that do will be able to work about three and a half day week. I vote for three and a half day week, thank you.
But to look at where we will be in 20 years, by then, of course, we should have landed in a post-work society, certainly in terms of the way that we currently understand it. And then you get to how wealth will exist in the same way. Because potentially all of these amazing new intelligences should cause a tremendous leveling up, or they don't – if we continue with the disparity that we have in our society today with an absolutely tiny number of people owning a totally absurd share of the wealth. We're getting a bit away from wealth management, but I think you've got to look at all of these things.
I actually believe wealth management, financial planning or anything similar would exist as independent discipline at that time. I think it will be absorbed into a far larger lifestyle management. Because where do we draw the line between wealth and health? Which is more valuable? You can have all the wealth in the world, but if you haven't got the health with which to enjoy it, what's the point?
Din: Actually one of the reasons that I seeded this question is because when I listen to people talk about how AI will change, the manner and nature of work, then why wouldn't it also have a knock-on effect on how well we perceive the value as wealth? I'm not working, if machines are doing so much for us that many jobs get phased out or tasks that we're supposed to do get phased out, then how we value work and how we're remunerated for it?
McKenna: And then again you do have that enormous risk of imbalance within society because if some people have access to the super intelligence and others don't, the people with the access to the AI or the super AI or wherever we go with it all of a sudden are at such a loaded advantage to everyone else.
If we can get through the next two decades without blowing ourselves up, without being wiped out by some pandemic or chemical experiment that goes on, the future for humanity I think is amazing.
Where wealth management, I see the future and this comes back to, if we look at the enormous opportunity, wealth management, financial planning is an incredibly valuable service for people but it's become too expensive for most.
It's a luxury and it shouldn't be. It should be a utility that everyone has access to. I suppose that's the difference perhaps. I would think about it like a health service but then perhaps we shouldn't get into the differences in the U.K. and the U.S. in terms of health services.
Genuinely I don't think there's ever been a more exciting time to be alive and probably never a scarier time to be alive at the same time and there's certainly never been a more exciting time to work in financial planning and wealth management because we have the opportunity to expand what we're doing over the next two, three, five, ten years to help everybody.
It is so hard to plan 20 years out, it is like the equivalent maybe of a couple of centuries. But an unbelievably exciting time and a great time to be involved in helping people secure their financial futures and secure their happiness.
