Podcast 18th September 2015
Hi I am Arjun Parthasarathy speaking and this podcast is on “Dear Financial Advisor, are you ready to compete with AI?”
Like every other job in the planet, technology is replacing humans in the financial services industry. Artificial Intelligence (AI) has already replaced human intervention in transactions and is now replacing the Financial Advisor as well. Going forward, an investor will open an App, which will give the portfolio that is suitable for him or her and will then either execute the transactions or direct the investor to a platform that will execute transactions at almost zero cost. The investor will incur far less costs on both advisory and transactions than in dealing with a human interface.
The end result of investments through AI can be questioned but that is also the same with dealing with Financial Advisors, unless the Financial Advisor is offering a unique solution for the client. However for the Financial Advisor to differentiate himself or herself from the rest and also from AI, the advisor would have to have a strong sense of vision of the future.
Clients want to grow their wealth over a period of time and for that wealth to grow, portfolios should be forward looking. Hence their portfolios should have businesses that can compete and grow in a fast changing dynamic world. AI largely works on past data to predict the future, though there are models being built to predict the future with expected changes. However humans will still feed the expected changes for the AI to predict the future.
Financial advisors must then have the knowledge and develop an ability to foresee what’s going to happen in the future. The foundation for this will be an extra keen understanding of markets, businesses, economies and technology. The job of the Financial Advisor will become more difficult and fees will come off drastically given competition from AI. It will become a survival of the fittest for Financial Advisors going forward.
If you are a Financial Advisor, you should gear up to face the future. The pace at which technology is replacing humans is extremely fast and by the time you know it, technology would have already overrun the world of Financial Advisors.
Learn to develop an understanding of markets, businesses, economies and technology. Subscribe to Investors are Idiots.com. Please call Neelima at +919819770641 or log in to investorsareidiots.com to register. Thank you for listening in.