Artificial intelligence continues to make great progress as we seek greater efficiency in our businesses and interactions. Chatbots, a.k.a. virtual assistants, are already found on many websites as the first line of customer service. It won’t be long until they dominate customer service as they continue to learn from the millions of interactions with us humans.
The Threat of Chatbots
A recent WSJ article discussed how chatbots may become a dominant player in giving advice to clients. I can see several benefits a chatbot has over a human.
A chatbot “isn’t on the other line”. It doesn’t take a lunch – heck it never sleeps or goes home. A chatbot is available 24/7 and can help multiple people at once. It solves our human desire for instant gratification by providing instant responses to our queries.
A chatbot is smarter than a human. Its ability to recall information, find account forms and provide historical data/charts is greatly beyond our capacity in both speed and material. It won’t forget to email something to a client and will commit far fewer errors than we will – especially as it learns and adapts over time.
AI developers believe chatbots will one day be able to anticipate individuals’ needs and even offer personalized advice based on their situation. Such functionality is likely a few years out, but that seems to be where the industry is evolving.
Your Competitive Advantage Over Chatbots
Despite the threat and potential of chatbots, advisors who understand and incorporate psychology (behavioral finance) into their practice do not need to fear.
While chatbots will outperform humans in many ways, they will not be able to empathize with an investor. They may be able to detect fear and direct someone to an article about dealing with fear, but their responses will be at the PhD level – logical, rational.
Chatbots will never beat humans at being human. And what really makes relationships and trust is that human connection. The ability to listen, empathize and hold a hand (literally or figuratively). Many advisors think they use psychology well. But that is often defined as spewing out a few terms/soundbites, which a chatbot can do. Those advisors that live and breathe human connection and empathy in their practice have nothing to worry about. They will thrive as chatbots, and their attempt to scale the human touch, become more commonplace.
Chatbots & Roboadvisors – Different & The Same
Several years ago advisors were concerned about Roboadvisors. As I correctly opined over five years ago, advisors had nothing to worry about. Roboadvisors are nothing more than an allocator platform currently used by many full-service financial advisors.
I believe chatbots will follow a similar path. They will be feared by some advisors who are unsure of their value proposition, and embraced by others as a technology solution. Imagine if a chatbot could handle things like requesting a form for a withdrawal, getting past statements or other administrative need. Chatbots can be a great asset for advisors in doing the non-human stuff – the things they are better at.
I don’t see a technology on the horizon that will be able to replace the human experience of an advisor. Investors won’t ask a chatbot how their family is doing. They won’t ask to see the chatbot’s pictures from family vacation. And since most of our communication is non-verbal, we have a significant leg up on chatbots. Chatbots may be “cute”, but they are soulless. Advisors have nothing to worry about, so long as they are good at being human.