Wednesday, December 12, 2018

Keep Moving Forward

Ask The CFP® Practitioner



“It’s a never ending battle of making your cars better and also trying to be better yourself.”             

~ Dale Earnhardt, professional auto racing driver (1951-2001)


Question: What are your thoughts on self-driving cars?

Answer: Autonomous vehicles, or AVs as they’re known, represent a growing subcategory for the automobile industry. AVs are the marriage of technological and industrial forces bringing Silicon Valley together with Detroit to create vehicles that operate with minimal or no human interaction.

AVs are about mobility rather than driving. To many, mobility is the equivalent of freedom. Most retirees when asked what are their biggest concerns answer that maintaining independence, or being autonomous, is the top consideration. Access to mobility greatly improves one’s ability to remain on their own and age in place.

Artificial intelligence (AI) is the basis for AV software. For self-driving cars to be safe, dependable and reliable, statistical data is gathered by studying human driving behavior and paired with the car’s responses. Computer software calculates and perfects the information, which is used to imitate human logic and mimic our actions behind at the wheel. This type of machine learning has its limits though. Deep learning is required to go further into biological brain functions. Deep learning provides science-based intuition which is the byproduct of thousands of experiences, all with various outcomes, providing something like human awareness or a sixth sense. With AI and AV, algorithms (rules that are based on computer calculations) then fill the gap, bringing the human element of awareness, sensitivity and anticipation insight into the equation. Autonomous vehicles rely on artificial intelligence from deep learning to build or create a brain for self-driving cars. In contrast, machine learning is used to make a rules based bugger-flipping robot to perform the same physical task repeatedly.

SWOT

Strengths, weakness, opportunities and threats or SWOT is a form of strategic planning. The relationship between AI technology and the auto industry hasn’t always gone smoothly. At first, Detroit didn’t understand the need for driverless cars while Silicon Valley types were already in test phases. Over time a mutual understanding occurred to produce and manufacture varying levels of autonomous driving vehicles.

Strengths include access to mobility for everyone including those who are aging or disabled. Insurance costs will likely drop as safety improves and human error is removed from the driving experience. The introduction of additional safety features on new cars equate to lower insurance rates than on many older vehicles. In planning for future quality of life, a client acknowledged how happy she is to be alive during this technology rich time. She looks forward to access to AVs or a self-driving car when it’s time for her to hang up the car keys. She’ll likely use a facial recognition smart phone to hail an AV enabling her to meet friends for lunch, visit the beach or run errands. Technology may allow us to remain self-sufficient longer and age-in-place with greater ease. Currently, popular ridesharing apps like Uber and Lyft increase access to mobility.

Perceived weaknesses for the auto industry could be decreased demand for personally owned vehicles. At the same time this is a plus for the environment. If Detroit is worried, they only need to look towards China where vehicle sales last year quadrupled to 28.9 million of the total 79.02 million vehicles sold worldwide in 2017, according to Statista.

Opportunities and threats will both occur as the AVs evolve. The supply chain for various components will join technology, software and industrial production to create the end product. Identifying the winners and losers in this process is an intriguing and ongoing prospect.

From a regulatory stance, AV advancement depends on perfecting the artificial intelligence driving component to eradicate accidents. Cameras, sensors, radar, emergency braking systems, road-edge detection and the success of various other technologies will determine how soon AVs are the norm. It will clearly take time for us to move from gas-powered human-driven cars to electric/autonomous vehicles. This is one instance when being the first kid on the block to have something may not be a great idea. It may be advisable to wait a bit until things are perfected.

At its most basic level, mobility is a service measured by cost per mile. The American Automobile Association (AAA) states that in 1871, the total cost (inflation adjusted) to travel one mile in a horse drawn carriage was $1.70. Once the Model T came along in 1934, that cost fell to $0.70/mile and has stayed there since then. AAA predicts that by 2021 mobility costs will drop to $0.35/mile with the use of AVs.

New trends in transportation and mobility access are changing society. Seniors and the disabled will have much greater access, yet teenagers may miss out on the right of passage when one obtains a driver’s license. The times they are a changing. If you really want to confuse your grandkids, write in cursive, give them a car with manual transmission and a rotary phone. Stay focused and plan accordingly.

The opinions expressed are those of the writer, but not necessarily those of Raymond James and Associates, and subject to change at any time.

Information obtained from outside sources is believed to be reliable but is not guaranteed.

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.”

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email darcie.guerin@raymondjames.com. Website: www.raymondjames.com/Darcie.

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