In this article we’re going to discuss ways that blockchain and cryptocurrencies can help society and also financial planners in particular. Financial planners are oriented toward finance, of course; fintech (financial technology) is rapidly becoming a dominant part of planning.

Blockchain is basically an advanced spreadsheet spread across computers around the world. This network updates spreadsheets at regular intervals and people can continue to generate transactions that are verified by the network.

Information codified this way ensures the database isn’t backed up at just one location but is available at hundreds and thousands of locations and thus is easily verifiable.

This automatically instills trust in the system. People eventually could do without many of the traditional elements of third party verification, including perhaps contract lawyers, certain brokers and other kinds of intermediaries.

 “I think it is definitely evolving and ultimately the disruption is going to be explosive, certainly for an early adopter,” says Melissa Joy at the Center for Financial Planning. "We’re not early adopters but certainly we can see heading in this direction.”

Some of the following is taken from an FPSB study last year that provided comprehensive insights into how planners felt about planning in the future. While many parts of the financial industry have moved ahead rapidly with new technology, financial planning has moved more slowly.

For one thing, planning is advice-based so people don’t have to move as quickly as others do in more transaction-oriented occupations. Also, payment in many cases is at least partially dependent on advice, so planners aren’t losing money by moving more slowly.

Over time, there will be radical shifts and planners who want to keep up with the industry will make the effort to implement and use what’s coming available sooner rather than later.  

In some cases, the new technology will help younger people as well as people who are not so well off, but financial planners have mixed feelings about a mass-market approach. It may, they think, create lower margins and thus less profit. Others believe that cost savings will overcome lower costs in aggregated.

“We do need to adopt new technologies, especially when they become more popular,” Joy said. “Like other advisors, we are cautious about what we do, but I can see some younger advisors moving in this direction sooner rather than later.”

PricewaterhouseCoopers recently was quoted as saying: “To succeed in business today, you don’t need a digital strategy; you need a business strategy…for the digital age.” In other words, the digital age is already here and you must not think about ways to anticipate it but ways to deal with what has already occurred.

Financial planners are, nonetheless, of two minds about what is occurring. They believe automated advice tools are negative as well as positive. But more and more they see at least some tools complementing what they are doing.

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Automated advice and fintech tools enable financial planners and financial advisors to increase practice efficiencies or cost-effectiveness; serve clients who are younger, lower-income and with fewer investable assets; and free financial planners to devote more time to activities that bring added value to clients.

Planners see fintech as a way to manage “know your client,” transparency and disclosure requirements through automation to ensure that all requirements have been met.

Planners see positives in numerous ways. They see fintech as contributing to increased efficiency and accuracy. They see it helpful when it comes to disclosure and helping them know their client.

Additionally, planners believe fintech may help reduce biases and conflicts of interest for both the client and the planner. And they believe fintech can help with making presentations and other forms of interaction more engaging and persuasive.

Big data is another area where planners find potential value as they can use fintech to help clients in terms of understanding the largest trends in terms of instruments and populations; likewise, scenario planning is another area where fintech can be brought to bear for purposes of explanation and real-time discussion.

Finally there’s empowerment and general financial literacy. Fintech can give clients the ability to better understand their progress and track how it is unfolding.  

None of this should be used by itself, but on the contrary, within a larger financial planning context. Planners still believe the intimate nature of their craft demands personal communication that cannot be replaced by technology.

“The most important planning outcomes for my clients cannot be replicated by an algorithm,” one planner is reported as saying.

And the Wall Street Journal is reported as saying, “Artificial intelligence should enable human advisors to spend more time at what they excel at—understanding the personal aspects of their clients’ financial lives and building a bond of trust.”

In fact, automation can be a distinct boon for those who are young or do not have enough money to work with a planner regularly. And also those who naturally want to do more work on their own. As fintech evolves, there will be more places where it can be applied, thus providing better services to the industry.

Who is eligible for fintech services will evolve as well. Nonetheless, fintech is never something to be used instead of personal financial planning but as an addition to it.

Automated advice may not give the kind of holistic advice that will tie together the different parts of a person’s full planning needs. But nonetheless, fintech will be ever more important to the ways that customers perceive their planners.

“People in the planning industry, like others, need time to come to grips with what’s occurring and time to fully adopt it,” says Tim Lea, author of Down the Rabbit Hole, an introductory book about blockchain. “The full strength of what is to come has not even been scratched yet.”

Financial planners are cautiously optimistic about fintech, but they don’t want it to move too fast. Regulation may be important to slow down destabilizing fintech applications that would otherwise cause problems if made too rapidly.

In fact, professionals believe that the evolution of fintech may be difficult for regulators to confront. Regulators and legislators have to closely monitor the advisory situation. Cloud computing is also becoming more popular and security will become a bigger issue as a result.

Over at ThinkAdvisor.com in an article entitled, “The Bitcoin Blockchain Won’t Transform Financial Services,” we find private and public legers may not make significant changes right away. In fact, this corresponds to what others are saying.

In the near term, the impact of blockchain and cryptocurrencies will be less than expected. Only in the longer term will it have more of an impact—and that impact will be greater than expected.

But an impact it will surely have. “Technology can be especially useful to firms that rely on intermediaries," said Alisson Andrade, senior analyst at Corporate Insight.

Such technology, usually in the area of blockchain, can reduce or eliminate intermediary costs over time, along with certain back office functionality. But foundational technologies take years or even decades to become thoroughly integrated.

Blockchain is already pushing increased interaction between private banks and transnational corporations. These are very large entities that may only survive intact via increased and specific regulation. But even specialized regulation may not do the trick. Intermediaries are likely on the way down no matter what.

Banks basically perform intermediary functions. Some of what large corporations do is also intermediary-like. Likewise, central banks with their monopoly-style money and large nation-states are going to have difficulties.

Financial planners who specialize in certain kinds of intermediation would do well to change over time. Additionally those who are trying to work with less well-off individuals and those who are trying to work with younger people may wish to investigate further automation.

But further automation is coming anyway, from a blockchain and cryptocurrency perspective. Profits that are being made today within the context of intermediation will shrink over time. And various kinds of cryptocurrencies will generate revenue that the alert planner can take advantage of.

Trade finance is being affected right now by blockchain. A recent article at Zerohedge explained how, because of the blockchain, Mercuria, ING, and Société Générale took advantage of real-time data. The original source documents were not necessary past the initial transaction which had already taken place.

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They were able to “auto-check” documents on a computer rather than doing it manually. That makes for a smooth process. There’s a huge incentive to move to the blockchain.

Santander estimates the blockchain will cut trade finance costs up to $20 billion. Venture capital firms and financial institutions are pouring millions of investment dollars into the blockchain. Right now, over 50 major financial institutions have in-house blockchain projects or relationships with blockchain startups. 

Like any fundamental change, the ramifications of fintech cannot be fully delineated. There will be twists and turns that we cannot see today. But significant changes are taking place that will only become more evident.

Fast movers will have the easiest time of it. But everyone will eventually have to shift at least some of what they are doing—financial planners, too.   

Mark Fadiman is a journalist working on both blockchain and cybercurrency issuance.