Of late, automated financial planning has become the talk of the town. It comes with its own share of irrefutable benefits that have the potential to completely revolutionise financial planning as a service. Before going into the benefits of the automation of financial planning, let us realise the fact that with the innumerable uncertainties that plague our lives, having a strong financial backbone has become the need of the hour. No matter how much we earn, if we are not disciplined enough, then having the financial freedom to meet all our goals and lead a stress-free post-retirement life would seem like a distant dream. Getting life-altering guidance towards correct financial planning is a boon, which everyone wishes for. Now, let us take a look at the factors that explain how automation can revolutionise the entire financial planning process.

Tracking Investments

With so many investment avenues and fund management houses today, it has become extremely difficult to track one’s investments. This is where automation comes into play. It helps in documenting all investments in a single place, thus helping us keep track of everything. When it comes to keeping track of financial goals, there is no doubt it becomes quite difficult to assess how well a person is doing with respect to his or her financial goals. Their achievements and whether his or her investments are as per the requirements or not, all these and several other questions become quite difficult to answer. This is where automation creates a difference by linking goals to investments, to simplify the assessment of one’s achievement of present and future financial goals.

Robo-advisors

Quantification of financial goals is also a big challenge where people are unable to assess what exactly would be the corpus requirement, inflation, market dynamics and feasibility of the goals. This is where automated suggestions based on data can give them a better understanding. The biggest example in today’s times are  the robo advisors, which in future can advise on investments basis several data points and correlation between several aspects of the market. Unlike human beings, they are capable of assessing future outcomes of portfolios basis risk profile, pattern of performance and relevant market scenarios, since humans tend to opt for investment options, which they think are correct and the people around them are opting for. Automation, thus, will help in eliminating such practices.

Budgeting

Many people are clueless when it comes to budgeting. They are unaware of the right amount to spend, save, invest and how to attain a sustainable lifestyle that would help in managing finances. Here, automation helps in showing results based on the data of a similar set of population and gives a better overview of what people belonging to the same segment are doing. Automation also helps in screening out the possibility of human errors related to calculations and gives us the flexibility of scaling up enormously, which is not possible otherwise.

Going by recent developments, one can definitely say that we are gradually moving towards a point where financial planning processes will be totally automated or with least human intervention. This will make the tasks smooth, easy and hassle-free. Right from expense budgeting to portfolio management and recommendation, everything will be automated in the near future. Parallelly, the automated process should also be made interactive, which understands the situational needs and is intelligent enough to identify errors while taking the inputs. This will make the automation process more robust and effective. In the end, one needs to realise that planning and advising is of no use if one does not inculcate habits, such as curbing the impulse to spend on frivolous expenses, prioritisation of expenses that are necessary and accordingly planning the monthly expenditure following the budget in a disciplined manner after considering the investments and expenditure. So, let us get disciplined and avail the benefits of automated financial planning, which is definitely the future.

The writer is the CEO and Co-founder, Capital Quotient