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What is the optimal mind machine balance in wealth management

By 24 August 2018November 9th, 2022No Comments

We are starting to hear a lot about mind machine balance in this rapidly evolving world of AI (artificial intelligence), and the wealth management industry is not immune from such.

In short what I understand appears to be generally accepted across the board is:

  1. all functions that are operational processes with little or no judgement required are very likely to be automated
  2. the proximity of these automated functions to the generation of the initiating idea is getting closer and closer, and processes in the path are getting increasingly removed (for example we can talk to our phones to send texts, emails, turn the lights on etc rather than typing instructions in)
  3. the accuracy of these automated processes is getting increasingly accurate, and with a small amount of human oversight (not necessary direct involvement) can reach almost 100% accuracy level
  4. where judgement and opinion is an ‘input’ to something, they key is to capture these judgements or opinions in a ‘raw’ form that we can then let the machines deal with. When I say a ‘raw’ form this is often about what it means with respect to desired output impact rather than vague concepts
  5. Still not much replaces the multi-dimensioanal human to human communications that are key to building empathy and trust

So what will differentiate all the innovations in this area and how will they be compared. My guess the answer to this is:

  1. access to data – solutions will need access to data to power these intelligent machines and in wealth management this is existing client portfolio data, investment mandates and what is unique about the investor
  2. perspective of the subject – the designers of this new era of machines will have to have the perspective of the whole market that these machines are going to serve. They will have to void of the biases of the past, and have both extensive subject matter expertise as well as a deep affinity for the people that they ultimately are seeking to serve, with a clear pecking order of importance of stakeholders.

So what does this mean in wealth management ? What could be the end game ? My sense of the end game is that for wealth management of investments:

a) there needs to be very clear lines of articulation as to who is providing opinion and how it is articulated (ie what investments to buy , sell or hold, asset allocations etc)

b) there needs to be very clear rules around how to ‘process’ the often varying and even conflicting inputs from various stakeholders (ie from consumers, from advisers, from investment professionals, from the market etc) – this is almost a re-wiring of an industry from being product centric to client centric

c) there will be a automated machine processes to take all the above and  ‘compute’ outputs that are optimal for end customers and their advisers.  Whilst I expect many of these to evolve over the years, the key in the world of client best interest obligations for wealth managers is achieving this entirely in the context of the client, which means entire independence from product, platform or other biases.

Clearly the machine processing is something we at Financial Simplicity have thought about and believe we have almost perfected over several years. So if you are thinking about what is an optimal model in the new world of mind / machine balance in wealth management, we would be happy to share our thoughts with you, you may be surprised how ‘simple’ it can be.


Stuart Holdsworth

Author Stuart Holdsworth

Stuart has over 30 years of experience in the use of technology for the strategic competitive advantage of businesses in the financial markets and investment industry.

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