In the future, quantum computing will help financial advisers more accurately predict how long someone’s retirement savings will last. It will also be a pathway to delivering hyper-personalised financial advice.
Faster and more accurate financial planning, improved risk profiling, better fraud detection and real-time compliance monitoring are other benefits of this still-nascent technology. Better predictive models for producing real-time market insights, predictive analytics based on market movements and more accurate market forecasts are other pros. Just not quite yet.
“It’s like having access to a high-speed internet connection when you’ve only got a mobile phone from the early 2000s,” says Alex Jamieson, founder of AJ Financial Planning, commenting on quantum computing’s potential in financial advice.
Quantum computing’s potential lies in its ability to perform calculations at speeds far beyond what classical computers are capable of and address currently unsolvable problems. It can evaluate vast asset combinations simultaneously when market conditions are changing rapidly. It may also offer advantages in terms of risk management and real-time portfolio rebalancing, helping investors react faster to volatility or opportunities.
Compared to standard models, it may also better incorporate psychological biases when deciding the best way to respond to market events and preferences compared to today’s models.
But it’s a technology still in its infancy. To be used for computational use, quantum bits or qubits must be shielded from interference such as electromagnetic radiation. They also must be maintained in a vacuum and kept at a temperature of absolute zero, or minus 273.15° Celsius. These limitations must be resolved before quantum computing is incorporated in financial advice in any real way.
Swinburne University academic, Dimitrios Salampasis, says quantum computing has the potential to transform financial advice by improving accuracy, speed and personalisation.
“It can more deeply analyse correlations and interdependencies across markets, taking into account macroeconomic variables and other factors,” he says.
When it eventually comes of age, one of the greatest opportunities for quantum computing in financial advice is high-speed financial simulations. In the future quantum computing will be used to work out the impact of buying or selling a property versus investing in something. It will be used to figure out how the timing of someone’s retirement impacts how long their savings will last. But it won’t change the fundamental nature of advice.
Jamieson says quantum computing becomes interesting in financial planning for its ability to run and compare more complex financial alternative realities with multiple-layer strategies.
“A quant computer can’t provide the right answer, but it can provide alternative realities,” Jamieson says.
“Financial planning comes in over the top to help the client balance lifestyle goals and financial outcomes.”
