Recently, I came across an interesting article in the New York Times. Titled “Social Media Finds New Role as News and Entertainment Curator”, this article was published in the technology section. (Read the full story here.)
What caught my interest was something that looked counter-intuitive going by the current trends. While the world is thinking that machines would take over our jobs, the leaders of technology business like Facebook and Snapchat are looking for humans. They are hiring journalists and reporters to curate and edit what users consume.
There are books and report written about reducing employability of humans given that machines can take over many of the tasks. While the discussion in earlier days was about machines taking over various mundane tasks, e.g. ticketing, now even complex jobs are being done by machines. (Recently, there was a news report about a surgical procedure performed on a pig by a machine.) Though there are reservations, the thought is scary. Will machines take over?
The question is relevant for human investment and financial advisors with the machines posing a serious threat to the profession in the form of robo-advisors. There is a tendency among many of us to get swayed by what is happening, especially if it is “new”. On top of it, if the “new” is about technology, scientific, etc. we stop questioning. Let us look at the last line of a recent article in one of the leading business dailies:
“Before hiring an RIA, check his professional qualifications. He should also be highly recommended by his existing clients.”
While the article suggests (I agree, this is a right thing to do before you hire a professional advisor) that one should check the professional qualifications of the RIA before hiring, why is no such thing prescribed for robos! Should one assume that all robos hire only qualified people? What are the qualifications of the person behind the logic on which the programs (i.e. algorithm) is based? In fact, what if an investor were to rely solely on the recommendations on the website? And finally, it is easier for a robo-adviser to game the recommendations to reflect the business compulsions of the owners of the robo advisers!
See what Ankur Thakkar, the editorial lead of Vine, the video service owned by Twitter has to say?
“Where curation picks up,” said Ankur Thakkar, the editorial lead of Vine, “is that you need human eyes and ears to pick up on a cultural trend that a machine might not see.”
It is important to understand the difference between what humans can do and what machines can do. What are their respective strengths? What are their respective weaknesses?
A machine in the present day context is a computer that uses various algorithms to perform complex tasks. However, at the core, a computer is an adding machine, a very sophisticated one at that. It can do repetitive tasks at very high speeds while maintaining accuracy. It does not get bored doing the same things over and over again. It does not have any ego to feel that certain task is below its dignity. The smartest supercomputer also would not mind if asked to add two plus two. A human would get bored (well, most, if not all) if one has to do the same task again and again. Also, we make mistakes. We get emotional if we are assigned a lower task.
The moment there is complexity involved requiring judgment; the scientists have yet not been able to write a code that can help computers decide how to work. (Though, science is progressing very fast on this). Humans can sense the situation and change course, if required. Now, that is a programming that has taken millions of years to write and evolve. But, as we know, this programming also has some severe limitations.
At the same time, the combination of speed, convenience and accuracy can also turn out to be a huge disadvantage of technology. As many of us know, money is made by holding onto investments and not by frequently making changes. Technology makes transactions fast, accurate, seamless and convenient, as we saw earlier. If someone gets swayed by this advantage of technology, one tends to over transact. This is where humans play a huge role as counselors and keep them invested as per a proper investment plan. Staying course is a great value addition for investors.
Technology also has a big limitation – lack of human touch or a face. Though technology can excel at personalizing many things, the human touch is what some people are very comfortable with.
Having said all this, financial intermediaries must be ever watchful about this threat. It is important to keep an eye on the developments on the technology front. Understand the role of a human in helping the human investors.
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.
