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The role of AI and Robo in Advice

By 17 August 2017November 7th, 2022No Comments

I am really enjoying the heating debate about whether Robo advice will replace human advisors or complement human advisors and in the last month a few thing have to come to light that are starting to provide not only some trends, but some sound argument as to why these trends are happening.

If I can summarise the major trend as being that there is a growing shift towards the case where technology is best to support human advisers rather than be a threat to replace them. The evidence in the global wealth industry is that more and more firms that were regarded as consumer Robo advisers are becoming more ‘business to business’ and that there is an increasingly defined line between a) the techniques and technologies to support an advice process vs b) the brand and experience of the interaction with human consumers. What we are seeing is that the purist machine to human interfaces suffice for what are more ‘robo products’ (such as a defined managed portfolio to a set profile), however fall short generally in the complicated resolutions of providing human advice based on different scenarios and options.

The techniques and technologies as a) above, however are now increasingly sophisticated to enable very personalized portfolio management with automated efficiency from an investment management perspective, however this largely does fall short of providing real human ‘advice’. What we are seeing today is that the consumer to ‘advice’ interaction is actually in many cases quite complex in assessing what is going on financially and emotionally with the client. There are many levels of communication going on in a human to human conversation (both over the phone and face to face) and whilst research and technologies are being furthered to define and interpret this, we appear to be some way off to fully encapsulate this.

So what seems to be becoming accepted is that technology and techniques are great at doing some of the complex and difficult computational work, but it still requires the very muti-dimenionsal nature of the human brain to really filter the results from such for each consumer to make it sit best for the consumer. The point being each human consumer is different and to achieve an optimal relationship one has to treat them differently.

In a recent TED talk here from the creator of ‘Siri’, he brought some real science to this in a case study of comparing performance of both human and machines to detect patterns in a laboratory that lead to identifying cancer. Standalone the machines could achieve low 90%s success, and humans mid 90s% success, but it was the combination of machine and human together that could yield 99% success. In short machines could reduce 85% of the human error rate by helping the humans be artificially intelligent. He cited also that this is largely because the machines can identify patterns the humans miss, but the humans have more of an ability to reject false positives (ie where a machine has detected something and it was wrong or inappropriate). His point is that as we increasingly progress towards digitally mediated lives, together machines and humans overcome human cognitive limitations, and the more advanced the machines get the more smarter the humans can be in their interactions with other humans.

At Financial Simplicity we bring this to life  in the increasingly scrutinized area of investment management where we help human financial advisers and investment managers with intelligent technologies to help them be smarter, that of pro-actively identifying patterns in investment portfolios that perhaps the human could not spot, performing the complex mathematics to bring this into some form of actionable portfolio adjustments, and provide this in a way that the human can apply their own judgements (often the identification of false positives) bringing value to their relationships and businesses.

I see this ‘humanistic’ AI as infiltrating all areas of our lives to help humans with the delivery of what is really very complicated interactions, yet supported (not replaced) by intelligent technologies. When it comes to the business of investments this is all about identifying portfolios that need work to reduce business risk, its about using technologies to do complex calculations to reduce costs of humans trying to do the same, it’s about doing this is a non-prescriptive way that supports each and every human to human interaction to increase service levels. With this in mind it is hard to imagine how anyone could be competitive in the industry moving forward without such !

Some questions to ponder:

  • In serving your clients, what is the interface between the clients investments and you ? How ‘humanistic’ is this ?
  • Are you in control of it every adjustment to be able to ‘filter out’ humanly anything that doesn’t reflect your relationship with them ?
  • In a world of increasing gravitation to the appreciation (and hence value) of human to human communications, how can you use humanistic AI and technologies to support your business and value proposition ?

#AI #regtech


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.

More posts by Stuart Holdsworth

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