Artificial intelligence and machine learning are still a coupleof years away from being really useful in financial planning,according to Tony Stich, director of global marketing at Advicent,a financial planning software provider. He noted that thetechnology is not intuitive enough yet for advisors' purposes.First, Stich believes, the “third wave of the internet will reallyhit the fintech space.”

The “third wave” refers to the ubiquitousness of the internet:The Internet of Things, for example.

“Over the next decade and beyond,” Steve Case, co-founder ofAOL, wrote for the Wall Street Journal in an April 2016 op-ed, “theinternet will rapidly become ubiquitous, integrated into oureveryday lives, often in invisible ways.”

Case's book, “The Third Wave: An Entrepreneur's Vision of theFuture,” was also published in April.

That third wave entails a “more seamless communication betweentechnology,” Stich said. “Consumers and advisors are going toexpect more instant communication between the technology stacks:That's CRM talking to financial planning software. That's risktolerance software talking to CRM. We're going to see more of thatbefore we see AI really taking shape.”

More integration and communication between systems puts morepressure on firms to have effective cybersecurity prevention andresponse plans to address cyber risk.

“As these communication channels begin to open, it's much moreimportant that we are vigilant in our security methods,” Stichsaid.

He predicted there will be an increase in discussions about therole of governing body to oversee APIs and other types of seamlesscommunication used by different technologies.

“Right now, there is no regulation. The communication channels,that application program interface or API, are not regulated. Thereare no cybersecurity requirements to communicate between twotechnologies, and many technology folks are beginning to startasking those questions.”

The first step may be agreements between different technologyproviders that set a cybersecurity baseline before integrating witheach other. Providers “might say, 'Hey, if you want to talk to ourtechnology, you have to follow these guidelines. Thesecybersecurity needs must be met prior to communicating withus.'”

A governing body that addresses cybersecurity may notnecessarily be a regulator, but may take the form of a non-profitor a consortium of large firms that create guidelines for firms,Stich said.

Financial Innovation Now is one such consortium, comprisingAmazon, Apple, Google, Intuit and PayPal. It calls for aprinciples-based standard for protecting consumers' financialinformation rather than adopting a dominant technology.

The National Institute of Standards and Technology, part of theU.S. Department of Commerce, released a framework in 2014 outliningindustry standards and best practices to help firms managecybersecurity risks. An updated version of the framework isexpected in early 2017.

Technology and the DOL Fiduciary Rule

Along with cybersecurity, the DOL fiduciary rule is among themost pressing issues for financial advisors today. Stich believesthe industry will continue to adopt “sophisticated planning toolsto help advisors and firms comply with those new standards.”

He joked that technology firms must have lobbied for the rulebecause “technology really is the best, easiest and most efficientway to comply with the rule,” as it allows firms to offer soundfinancial management, archiving and reports, and “transparency,which will help meet the best interest of the client [requirementin the rule] by providing a more holistic financial planningpicture.”

Amid speculation that the DOL's fiduciary rule won't survive aTrump administration, at least not in the form finalized in April2016, Stich said his position on how credit unions should proceedis unchanged: “Continue moving forward.”

Credit unions have already invested time and money implementingthe changes needed to comply with the rule, he said.

“Technology, especially compliance workflow technology, isbeneficial to their firm regardless of the [fate of the] DOL rule,”he said. It can help them be “more efficient, they can see muchmore of the behaviors of their advisors and their end users, theclients. That's going to benefit them in the long term in theirprofitability and how they deploy digital advice.”

On a related note, Stich believes robo-advisors will “continueto commoditize and will become ubiquitous. […] It will be a race tothe bottom,” he said. “With it commoditizing so quickly, the valueof the tool will drop.”

He believes automated wealth management tools will shift fromsimple robo-advisors to “more authentic, self-directed planningtools” developed in-house by firms. This next generation of digitalwealth management tools will provide a better value proposition inrelation to the firm's brand, he added.

Today's robo-advisors are “becoming more and more vanilla,” hesaid, with “the same risk tolerance questions, the same savingsquestions, the same age questions.” The next generation ofself-directed planning tools will be more like a “life coach” thana robo-advisor, he said.

“We're going to provide much more in terms of coaching throughlife experiences, meeting those financial goals one might have.It's going to be a much more intuitive, much more welcomeexperience, than your standard robo-advisor,” he said.