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Guest Column The rise of the machines

The rise of the machines

An IFA can handle the client’s emotions, hold hands and give assurances or remind them about the inherent risks.
Amit Trivedi Feb 21, 2017

In his book, “The Rise of The Robots – Technology and the Threat of Mass Unemployment”, Martin Ford paints a very bleak picture of the future of mankind. According to the book, the future will see many jobs being taken over by machines leaving humans jobless. There would be almost nothing that the robots cannot perform better, faster and cheaper than humans.

He goes on to describe the rise of machines in factories, where they are increasingly replacing human labor. Manufacturing jobs are on a decline. Google has developed a driver-less car and drones are already delivering goods bought from Amazon by customers in the US.

These days, when we hear so many things about robo-advisors or online transaction platforms or e-commerce sites getting into the distribution of financial products, some of us might wonder what our future is. This is exactly the challenge or fear that Martin Ford talks about in his book.

However, listen to Dr. Michio Kaku, physicist and futurist, a professor of theoretical physics at the City College of New York and you get a different perspective. He believes that a computer is essentially an adding machine, albeit one which does the job of adding (calculations) very fast and accurately. It also does not get bored, even when doing repetitive tasks.

However, it can only follow instructions. If something comes out of the ordinary, something that the person who wrote the algorithm had not envisaged, the machine fails. And that is the edge that humans need to work on.

Let us come back to the strengths of the machines. In addition to being fast, accurate and capable of repetitive tasks, machines have no feelings and hence are not intimidated by the scale or complexity of a job.

The boredom or inaccuracy differentiate humans and actually, these apparent weaknesses are the strengths of humans over machines. That is because when an IFA deals with human clients, these human clients are also subject to the same emotions and inconsistencies, which machines cannot understand. 

Today algorithms are not available to understand human feelings and emotions. Having feelings, understanding others’ feelings and responding to those feelings are beyond the abilities of the robots, at least so far.

In the world of investing, investors invest their money when they are hopeful and they panic when fear strikes. The sheer mention of the word ‘risk’ arouses fear in the mind of investors, whereas ‘guarantee’ sends a sense of security.

For instance, many investors who had an exposure to equities turned bearish post the financial crisis of 2008. In fact, an independent report said that the mutual fund industry witnessed highest number of discontinued SIPs between September 2008 and March 2009.

During such times, an IFA can go to clients and deal with their emotions, hold hands and give assurances or remind them about the inherent risks. A machine cannot go to a customer by itself. Some intervention is essential to stop the customer from making a big mistake. While a human can also fail in such a scenario, his probability of success is higher than that of a robot.

Simply put, humans can understand the context and nuances, which a machine may not.

Take for example, two different scenes from the Hindi movies. In the first, the hero of the movie goes to the heroine’s father and says, “Mein aap se aap ki beti ka haath maangne aaya hoon.” Now remember the scene in Sholay where Thakur is tied with ropes and Gabbar Singh is standing behind him with swords in both hands and shouting, “Yeh haath humko de de Thakur.” Everyone would understand what the hero is asking for. Everyone understands what Gabbar Singh is asking for. Though both lines appear similar, there is a world of difference. How would a machine understand such nuances?

Such nuances have to be captured while one is talking to the clients. So very often, the clients do not spell out their actual fears. A good IFA would keep probing until she gets a proper answer.

It is difficult for a human to judge what could be going on in the mind of the client. It is even more difficult to write an algorithm for this.

Still, a human being can see certain verbal and non-verbal indicators to take a view: Is the person asking this question because he is suspicious? What has been the IFA’s experience with this client?

Objections are common for anyone engaged in the business of sales. However, the investment products are a bit different from most other product. The objections or queries continue through the life of the investments, especially those of the risky variety. Handling objections is something human advisors can do, not robo advisors.

Summing up, machines and humans would co-exist just like in the past, too. There are jobs that the machine can do better and there are jobs that a human can do better than the machines. Smart managers would be able to figure this out sooner and distribute work accordingly. After all, the future may not be as bleak as painted by Martin Ford in his book “The Rise of The Robots”.

The future may see collaboration between humans and machines. When both combine their strengths, the productivity would be much more.

The author runs Karmayog Knowledge Academy. He can be reached at amit@karmayog-knowledge.com. He has authored a book titled “Riding the Roller Coaster – Lessons from Financial Market Cycles We Repeatedly Forget”.

The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual. 

 

2 Comments
Mahesh D · 4 months ago
IFAs who sold closed ended equity funds in 2014, which are no where near even 3-4% returns today, they are more worried than anyone else.
Prashant · 3 months ago
I agree with you. You are absolutely right. But what about the fund house who launched closed ended funds? Who did they launch it for? And who did SEBI pass it for? If closed ended funds are not good for investors than why manufacture them and why allow them?
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