The world of credit cards we’ve been living for the past 40 years has increasingly cut us off from the feel of cash.
But technology is about to change that and it will mean a shake-up in the financial advising industry, according to Australian futurist Morris Miselowski.
“Up until now, society has been coming to them (financial advisers) with what I call the Oliver principle: ‘Here’s my finances, please give me more’,” Miselwoski says.
“And the financial adviser, with their skill set and their wisdom, would say: ‘Here’s your finances, this is who you are and this is what your family needs’.
“They would then put together a scheme for them and nine times out of 10 these are great.”
The process was abstract for most.
“Since the ’70s I believe we have lost our connection with money,” he says. “What happened was that we stopped using cash and we moved into a credit card society.
“Most people look up their bank account and do mental gymnastics on what they owe and when to pay it. We really don’t know so we go out and spend anyway. We think we’re OK so we hope it will be.”
Before that, there was American Express and Diners for the well-off few. The height of credit for most was lay-buying at the department store.
These were the days when people saved and each child had a Commonwealth Bank account.
“We were really connected with cash in every sense and we knew if we ran out of cash, like if we ran out of water, there just wasn’t anymore,” Miselwoski says.
That connection to money is about to be re-established.
“Now we will have a digital connection to money that we have not seen before,” Miselwoski says.
“We are now really comfortable with using banking apps.”
It seems so obvious but 10 years ago people would say: “We are never going to do our banking online.”
Now 80% of all ordinary transactions are online and 40% are through an app.
What isn’t common, except at the top end of the market, is all a person’s financial information, including superannuation, bank accounts and share portfolios, brought together in one place.
In Australia, there is Pocketbook and in the US there are several apps and services including one called Simple.
“When we as human being have our noses rubbed in information we tend to react,” he says. “If the screen is telling us to hold off we will.”
Simple has just sold in the US for $117 million. It re-imagined what banking should be online with an easy interface.
Questions can be answered quickly: How much have I spent on coffee in the last month? What’s my dog cost me in the last year? How many shoes has my wife been buying?
It gives answers in real-time and in plain English.
“You will get a true indication of who you are,” he says. “I am talking about individuals becoming the centre of the ecosystem.”
At the moment most people seek out a financial adviser when they hit about age 53. They have a bit of super and they know they are eight to 10 years away from having to make big decisions on retirement.
“We will now start far younger,” he says.
“Kids are more intimate with it and have more of a sense of saving. We will now be more comfortable paying for advice. We will look for it and we will get advice in real-time.”
A financial adviser’s system will tell them when a client is spending too much or when the share portfolio needs a tweak.
“That’s what I call financial intimacy,” he says. “They (financial advisers) will be able to work better, deeper and for longer with clients.”
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