Have you been in business long enough to recall when you began using computers? Remember the first portable telephones and their evolution to become today’s sophisticated smartphones?
When smarter, more efficient ways of doing business came along, we all adapted, some of us more readily than others.
Well, get ready for some more technological change. Actually, change isn’t the best word for it. Rather, exponential technologies will disrupt virtually every aspect of the human race, and that, of course, includes big changes for financial advisors.
Yes, the advisory world is about to undergo an unprecedented makeover, whether we’re ready for it or not.
And the future I’m referring to isn’t a distant one. I’m talking about the next three to 10 years—not two to three decades from now. If that shocks you, well, it shocked me, too, when I first realized this.
My interest began several years ago, after I interviewed Ray Kurzweil on my weekly television show. Ray is one of the most acclaimed futurists in the world—inventor of, among other things, the first CCD flatbed scanner, the first optical character reader, the first print-to-speech reading machine for the blind, the first commercial text-to-speech synthesizer and a revolutionary music synthesizer (Stevie Wonder bought one of the first ones). He’s on the faculty at Harvard, the recipient of 20 honorary doctorates, and he’s now Google’s director of engineering.
Kurzweil has written extensively on singularity—the point in time when artificial intelligence will be indistinguishable from biological intelligence—and he co-founded Singularity University. (Disclosure: I graduated from its executive program in 2012 and later became a guest lecturer and investor in the accredited school.)
Kurzweil and others believe personal computers will become as fast as the human brain within five years. Software will emulate human intelligence within 10 years, and singularity will be achieved within 15. Even if these predictions are off by a factor of a million, many experts say, singularity will be delayed only 15 years.
How might we have to adjust the advice we give to clients and alter our business models?
The Future Of The IA World
March 2, 2015
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Comments
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Predicting the future, albeit fascinating, is a low risk endeavor. Unless you are incredibly prophetic, no one remembers what you said 15 years ago so it doesn’t matter if you were right or wrong in your predictions. What is compelling is the realization that change is actually the only constant and the need to adapt is ongoing. The ability to pivot in the face of constant change is the hallmark of exceptional leadership. As to the robo-advisor invasion, many parallels can be made in a variety of industries- cosmetics for one. Customers for cosmetics decide to buy either from a mass-market retailer or from a high-touch service department store. People will pay a premium for a product that makes them feel good and is accompanied by excellent service. Financial advice is no different. So the challenge for financial advisors it to step up your game! Advisors need to offer something of more value to clients—additional client offerings and a higher quality service. The question this article should compel you to ask is “What am I offering NOW that separates me from the competition?†Complacency is the enemy.
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Although a fairly good article about the way technology changes the world, the robo advisor argument is already getting old; almost as old as the word, "disruption". The point that seems to always be lacking in this silly argument is that we are never comparing apples to apples. What on earth does a robo advisor platform have to do with what we do and what we charge? Did the fee of the CPA drastically change when turbotax came out? How about attorney's? Did Bob Shapiro's legal zoom reduce attorney's fees from $200-$500 and hour?...of course not. Although there is some downward trajectory in advisor fees, it will remain around the 1% mark for the foreseeable future because we provide a completely different experience and one more critical to the more important behavioral element of money management and financial planning. The economies of scale prevent it from going much lower as most of us would leave the profession if we can't get paid reasonable compensation net of our ever growing expenses. More importantly, as with the turbo tax crowd and the legal zoom crowd, RoboForm clients were never going to be our clients to begin with nor did we want them. Ric is an outstanding businessman and I'm sure great at making money but when it comes to being an in the trenches advisor which he no longer is, all of us need to set our own course based on fair like every other professional and stop taking advice from so many people whose opinion we are for some reason forced to listen too.