The author of this article argues that while it might be early for quantum computing to be a tool for the mass-market, the same was said decades ago about the idea of hand-held devices we now all take for granted. And quantum computing will shape the world that wealth management operates in, the writer says.

For those who follow technology developments and how they might affect wealth management, a term that comes up occasionally is “quantum computing.” According to one definition from IBM, this refers to a “rapidly-emerging technology that harnesses the laws of quantum mechanics to solve problems too complex for classical computers.”

So what does this mean for the sector? To try and make sense of it all, we carry this guest article from Raj Madan, chief technology officer at AdvisorEngine, a wealth management software firm based in Raleigh, North Carolina. The editors are pleased are to share these insights; the usual editorial disclaimers apply. Email tom.burroughes@wealthbriefing.com if you wish to respond.

 
The next innovation wave in technology will profoundly impact your professional practice and reverberate through your personal life.
 
No, I’m not talking about artificial intelligence – I’m referring to a new era of computing power that’s just a few years away, called quantum computing.
 
Quantum computers will be able to solve challenges in minutes that today’s supercomputers would need centuries to figure out – modeling a cure for cancer, unlocking new sources of energy or determining how to turn deserts into farmland.
 
In financial services, quantum computing’s impact will be felt across the industry, from how we bank to how we build and manage investment portfolios, price assets, assess risk or detect fraud.
 
If you think AI is science fiction, quantum computing will sound almost unbelievable. To grasp it, let me explain the transformation underway in how computers work.
 
Beyond binary
Since their inception, computers run on binary code – think of the 1s and 0s you’ve seen on screens in films like The Matrix. Computers have become more powerful over time because we’ve managed to continually increase the number of transistors (tiny electrical amplifiers) we can fit on microchips, making these machines more efficient at processing electrical signals.

But we’ve nearly reached a physical limit to how much we can fit on a single microchip. Binary code is showing its age when tasked with modern complex problems, such as simulating the behavior of a molecule.
 
Quantum computing smashes through such limitations by doing away with transistors or relying solely on binary language. Instead, they transmit electrical signals at the atomic level through particles. (Yes, you read that right). And they operate in a non-binary state, allowing for a much wider range of computational possibilities.
 
With these changes, it’s like going from driving on a highway in your car to orbiting the Earth in the Enterprise. Any task that involves mathematical equations goes into hyper drive. That’s not an outlandish comparison: In 2015, Google and NASA reported that their quantum computer had solved a problem 100 million times faster than a regular computer. Keep in mind that was an early quantum computer too.
 
Hyper-speed for daily business
Consider every process you rely on right now to run your daily business that involves any sort of computations and data: Monte Carlo simulations in portfolio management, risk profiling, trading, rebalancing, performance reporting and fee billing, to name a few. Now imagine completing all these tasks in the blink of an eye and have results in real time. Throw AI powered by quantum computing into the mix, and you begin to see how radically different our digital tools will become.
 
The impacts won’t be limited to the back office either. Markets being traded by quantum computers will behave differently. With exponential computing power and protections, cryptocurrencies will make more sense for everyday use by consumers. Even our overall longevity could see an uptick thanks to quantum machines solving traditional health challenges, requiring a rethink of how long clients need to prepare for retirement.
 
However, there are a couple of things to keep in mind.

Near-term hurdles 
Can you access quantum power right at this moment? Not yet. It’s still in the hands of governments and Big Tech, including Microsoft, Amazon and Google, and for a good reason. Quantum computers must run at supercool temperatures (-450 degrees Fahrenheit) to keep those particles they rely on from bouncing around. The infrastructure needed to operate these systems is both expensive and immense.
 
Big Tech is spending billions on quantum computing because they plan to offer enterprise access, much like they do for cloud computing. For firms able to tap into such power, it will provide a real competitive advantage. But access will likely come with a hefty cost at the start, so I expect primarily large enterprises will be at an advantage.
 
If you are running an RIA or family practice, then the burden will be on your technology and service providers to get quantum-powered. At AdvisorEngine, we’ve taken several steps to harness quantum computing when it becomes available, including re-architecting our technology foundation to be cloud-based architecture.      
 
But there are some things you can do now to make sure you’re not left behind when the quantum computing wave arrives.

Practice checklist
One is to make sure you’ve transitioned from running everything on desktop-based software to the cloud. Most technology providers, including AdvisorEngine, have made the switch in terms of their offerings. If you’re running desktop-based software, you’ll never be able to keep up with the upgrades needed to plug into quantum. It will be akin to owning a house with pre-1950s electrical wiring – your systems will be too outdated to run anything modern and will need to be replaced entirely.
 
That analogy is apt for another reason – it will be unsafe running your business off such a system as quantum access grows because quantum computing will simply overpower even conventional cybersecurity measures. Rather than try to explain, let me give you another sci-fi analogy: You’ll be flying your F-16 against ray-shielded spaceships. (That’s an Independence Day reference!) 

Now is the time to start asking your service providers how they will adapt their cyber defenses and ensure that your data, client data, and critical business tools are protected from quantum-powered malicious attacks.     
 
To be competitive, your firm should already be taking these steps to modernize your technology stack. But with quantum computing roughly five years away from public access, this is a real deadline for change.

Long-term potential
When I think about how quickly and how much of an impact generative AI tools made in just over a year since their general release – both in industry and in society – I get truly excited about the life-changing potential of quantum computing. It’s not hyperbole to say that computing will morph into a whole different space.
 
It will be years before quantum computers shrink enough to have them in our daily lives. But consider this: Just 20 years ago, the idea that we would be walking around with supercomputers in our pockets would have been farfetched. However, that's the reality today.
 
The opportunity now for your business is to be prepared to take advantage of quantum computing when it becomes available because the firms that can do so will be competitive on an entirely different level.