Robot - Next Level Education
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Robot

Robot

The threat of technology is quite real. If you look around it isn’t difficult to see that many professions have vanished from the surface of the planet we live in.

The travel agent has disappeared, the music and book retailer is sitting idle, the postman is a distant memory.

In this context Financial Advisors have a reason to be concerned and they cannot be faulted for being concerned.

If product selection is the space one wishes to operate in, then it would be impossible to compete with a machine which can scan thousands of products and pull out the one which scores well on defined parameters.

But if we are from the school of thought that investment management is behaviour management first and product management thereafter, then the situation appears different.

A human being has emotions. Emotions by themselves are neither black nor white. They are shades of grey. To manage emotions, one would need a robot or computer which feels emotions. Unfortunately for the champions of robot advisory, such a contraption is only available inside the human body.

Let us study an experiment done among YMCA executives to understand the role of human interface.

The experiment was done to see how one could encourage people to go to the gym regularly. The accepted wisdom among YMCA executives was that people wanted fancy exercise equipment and sparkling, modern facilities. The YMCA had spent millions of dollars building weight rooms and yoga studios.

However new equipment added members but could not sustain them long enough. People would join the facility, come for a few days and then gradually the attendance would start to dwindle. But those gymnasiums that managed to retain their clients were doing something different.

Retention was driven by emotional factors, such as whether employees know new members’ names or said hello when they walked in. People, it turns out, often go to the gym looking for a human connection, not a treadmill. If a member made a friend at the YMCA, they were much more likely to show up for workout sessions.

In other words, people who join the YMCA have certain social habits. If the YMCA satisfied them, members were happy. So if the YMCA wanted to encourage people to exercise, it needed to take advantage of patterns that already existed, and teach employees to remember visitors’ names.

Clearly what worked for “exercise” was to wrap “exercise” with something that people already knew and liked, such as the instinct to go places where it’s easy to make friends.

“People want to visit places that satisfy their social needs. Getting people to exercise in groups makes it more likely they’ll stick with a workout. Therefore, the role of a physical trainer becomes so very important.”

Likewise, it would be impossible for somebody to have a robot or a computer as his or her “financial advisor” because investing is about behaviour and needs active behaviour management through human intervention.

Of course the need of the hour is to evolve advisory skills that focus on managing behaviour and not just managing products.

2 Comments
  • Smita Sachdev
    Posted at 17:24h, 15 September Reply

    Robot Advisor very nice article it helps advisor to understand what is required to sustain.

  • Rajesh Tiwari
    Posted at 10:18h, 16 September Reply

    Very useful article to make one realise that behaviour management should be more focused than product management

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