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NAPFA Fall Conference Keynotes Discuss Economic Outlook, AI, Fintech

By Susan Weiner

The old-fashioned, with local bourbon as its main ingredient, is the signature cocktail of Louisville. However, the comments of keynote speakers at the NAPFA Fall Conference in Louisville, KY, were forward-looking, not old-fashioned.

Economy Good, but Risks Loom

The U.S. economy looks good, but it may run into bumps in the road ahead, said Laura Ullrich, senior regional economist at the Charlotte regional branch of the Federal Reserve Bank of Richmond, in her national economic update.

At the end of 2022, forecasters predicted stagnant growth for the year ahead, Ullrich said. Instead, gross domestic product grew 2.0% in 2023’s first quarter and 2.4% in the second quarter (and a whopping 4.9% in the third quarter, as announced during the week following Ullrich’s talk). Consumer spending was the biggest driver, she said. However, those numbers conceal weakness in some interest rate-sensitive areas like commercial real estate, Ullrich said. There’s also some loss of jobs and population in rural and larger metropolitan areas. In another negative, inflation remains above the Fed’s 2% target.

Looking ahead, potential economic “speed bumps” loom, according to Ullrich:

  • Potential government shutdown
  • Geopolitical issues
  • Inflation that significantly exceeds the Federal Open Market Committee’s expectations
  • Anything that worsens supply chain issues
  • Covid variant that evades vaccines and causes more severe symptoms
  • Expiration of pandemic-era benefits and restart of student loan payments

AI and the Future of Financial Planning

Artificial intelligence (AI) and financial technology (fintech) can make financial planning more profitable, helpful, and impactful, said Ajamu Loving, a second-generation financial planner and associate professor of finance at the University of North Texas at Dallas.

Financial advisors should not fear AI, Loving said. That’s because they fall into two categories identified by futurist Michio Kaku as safe from AI-related job loss: jobs that involve imagination or conceiving of something that didn’t exist before and jobs that involve strategy, meaning coming up with a course of action based on amorphous information.

Instead, AI and fintech will help advisors to leverage and amplify their reach and to do it cost-effectively, Loving said. These approaches include

  • Behavioral biometrics
  • Gamification
  • Virtual reality and augmented reality
  • Decision support systems
  • Financial education apps

Loving discussed nine steps to implementing fintech in an advisory business, starting with evaluating your firm’s current business practices and where fintech can add the most value. He suggested involving junior advisors in piloting and testing fintech with clients who are most comfortable with technology and who have less complicated problems.

On a related note, whatever you do, don’t stand still, said futurist Scott Steinberg. He quoted General George S. Patton: “A good plan perfectly executed now is better than a perfect plan executed next week.”

Susan Weiner, CFA, is the editor of the NAPFA AdvisorSend her your ideas for articles and authors for the magazine.