Short Term Disruption, Long-term Economic Growth

You’ve probably heard big tech CEOs say AI will “change everything” and reshape our economy. Maybe it will, but because the technology is still in early stages, it’s difficult to comprehend and visualize what this could turn into. This uncertainty naturally creates some doubt and general anxiety about how this will affect us.

What is clear is the massive amount of investment flowing into AI models and technology right now. A lot of that money goes toward something very tangible: infrastructure. Data centers are being built everywhere, and they require land, construction materials, advanced chips, electricity, and water for cooling. That means:

• New jobs
• More demand for utilities
• Local economic growth
• More investment in grid capacity and infrastructure

While this may put some additional short-term strain on our utilities, this could also force us to build more capacity and invest in local infrastructure, which creates further economic impact.

AI is also helping to assist and/or automate everyday tasks. Meeting recaps, note-taking, email drafting, etc. It should help automate some of the mundane work so that we can spend more of our brain power in high value work. This is good for productivity, good for businesses and good for economic growth.

Of course, technology also replaces certain jobs. While on a human level this can be difficult to embrace, new industries and jobs are being created. My family used to go to Blockbuster for our Friday night movies, but now we have streaming services. Brick and mortar jobs disappeared, but entirely new industries and careers emerged. AI is likely to follow a similar pattern. With some very human short-term disruption, but also long-term growth.

What AI Means for your Financial Planning

Like any big technological shift, AI is both an opportunity and a risk from an investment standpoint. Many major tech companies’ valuations have soared on the expectation that AI will fuel significant new revenue streams in the future. But remember:

• The market is pricing in future success that hasn’t happened yet.
• If reality doesn’t match expectations, stock prices can swing quickly.

What’s different about these AI companies compared to the 2000s Dot Com era is that established companies are developing the technology. For companies Google, Meta, Nvidia, AI is an addition to their existing businesses, not their entire identity. That doesn’t eliminate risk, but it does help stabilize it.

Taking a step back, it’s important for us as planners to contextualize this AI boom and factor it into your long-term investment strategy and financial plan. You don’t need to predict which company will have the next breakthrough. Instead, we prefer to stay diversified across companies, industries, ideas, and countries so you’re positioned no matter where innovation happens next. Then, the most important thing becomes making sure the investments support the financial planning and goals that you have.

AI, Fraud, and Protecting Your Accounts

AI isn’t just impacting investments; it’s also changing how fraudsters operate. Scammers can now clone voices, mimic writing styles, scrape social media, and impersonate people with shocking accuracy. Financial planners are also tasked with being your first line of defense in protecting your accounts from any bad actors. The good news is that there are strong safeguards already in place:

• Bank Verification: Any transfer between your investment accounts and your bank must have matching ownership. Custodians and banks won’t approve it otherwise.
• Verbal Confirmation: When all else fails, a quick phone call to verbally confirm any distribution requests or account changes can block most impersonation attempts.
• Knowing You Personally: Because we build long-term relationships with our clients, we can often tell when something sounds “off” or out of character.
• Trusted Contacts: You can add a trusted contact to your account, which is someone we can call if we suspect fraud or can’t reach you.

The combination of all of these things are just a few ways that we defend against fraud in this ever digital and AI-driven world.

Conclusion

As humans, we’re wired for routine and right now we have disruptive force in AI looking to flip everything on its head. There is a lot to pay attention to, and not knowing how this could all unfold understandably creates some uncertainty and anxiety about our future. There’s real potential for AI to make life better, but it’s also okay to admit that some of us still think about the Terminator movies when we hear too much about machines getting smarter!