In a world of accelerating technology, where is the role of the human? Where do we fit in the face of AI? We already ask AI to answer all kinds of questions and solve many of our problems today. At first glance, it appears to only be limited by human creativity. From basic brainstorming on a whim to extracting takeaways from complicated datasets, AI is dynamic and revolutionary.
Some people (and companies) love it, embrace it, and incorporate it into their everyday lives. Others fear it, avoid it, and treat it like today’s equivalent of Big Brother meets I, Robot. Then there are those in between: massive swathes of people who aren’t sure what to think and are still trying to understand where this technology fits in their own lives and workplaces.
Clients often ask me about AI: they want to know how they can invest in it effectively, but they also ask how we incorporate or think about AI from the perspective of investing and financial advice. My answer might be strange:
AI and cutting edge technologies allow us to blend old fashioned, great service with incredible productivity and solutions.
What does that mean?
Clients are pleasantly surprised that we take the time to meet and discuss their concerns, answer their questions, and spend time on the little things. Many of them arrive with questions and leave with answers to other questions they only later realized were the right ones to ask. We don’t make them fill out endless questionnaires by the front desk that no one ever looks at, and we certainly never rush them out of a meeting.
We can do this because of technology accelerating our productivity. We can take our time for the things that truly matter–allowing clients to be heard and understood in order to give them great advice.
It is a very different experience than talking into a phone with an automated chatbot spitting out an answer to you. The chatbot is never going to gently guide you towards asking the right question–it will do its best to answer your question, and the quality of the answer will be driven by the question you asked combined with the quality of the data used to train it.
Meanwhile, advanced technology helps us in the back end. AI saves us time and energy in dozens of ways. We use AI to improve our investment process, improve our tax efficiency strategies, speed along processing times for paperwork, research investments, and encrypt client data.
We don’t believe in technology replacing us anytime soon; rather, technologies like AI are augmenting our level of service to levels we only dreamed of in years past.
Some of our advisors have been around for 25 or 30 years–they remember how technological limitations literally defined what kind of services they could offer. Advisors were often more of an access point to investments, placing transactions and providing access to a bond or a stock.
Today, technology has triggered a renaissance for our profession. Technological advances allow our small scale office to serve as a trusted, world class, central location for wealth management and advice across someone’s financial life.
Many people worry they will one day be replaced by technological progress. People and businesses need to stay open-minded and willing to learn if they are going to remain relevant in this rapidly evolving landscape. We may not be on the path to cyborg status here at Conestoga quite yet, but we recognize that embracing technological advances where appropriate is critical to providing world class service and solutions.
To be clear, not all technological advancements are for the better. In today’s world, privacy is more important and precarious than ever before. We remain constantly wary of how AI can over-listen, share information, and jeopardize security. Like so many other wonderful tools, it must be handled with care. I’ve also written before about some of the shortcomings associated with outsourcing the investment process too completely to algorithmic processes–we have seen it set investors back many years with subpar performance due to improper risk allocations.
AI is also limited by its nature. AI’s response quality is driven by the quality of the dataset it trains with, and there is a lot of noise, unproven strategy, and bad advice among the data sets of the most common generative AI chatbots. It is also predictive by design, which can lead it towards behavioral biases that are counterproductive to sound investing strategies.
I asked ChatGPT recently “How should I invest my portfolio?”. It listed 9 different general ideas with additional details for each generalized thought. Reading the long, complicated response, I couldn’t help but reflect on how overwhelming it would be to someone who wasn’t well versed in finance. Not only that–it threw out ideas that frankly shocked me. It suggested I consider TIPS and distressed stock in the same breath as private equity, a sector rotation strategy, commodities, and hedge funds.
Almost as if it realized how ridiculous the response was, it backpedaled at the end to say “But it all depends on your financial goals, risk tolerance, time horizon, and current financial situation.”
It was a pleasant reminder that my job security remains intact for now. AI is a wonderous tool, but it is, at the end of day, still a tool that needs an expert to leverage it. Like an electrician with a multimeter or a computer engineer with JavaScript, the person wielding the tool is everything.
AI also assumes no responsibility for a bad answer! Whereas when someone asks us for advice, it is our responsibility professionally to act in the best interest of the client AND to be highly competent with our recommendations. As fiduciaries, we are personally liable for bad advice. Meanwhile, Chatgpt or Claude can say “Oops, I was wrong” and that is the end of the story. Accountability is critical.
We are always reviewing technology for ways to improve client experiences and outcomes. Technology is improving with unbelievable speed, and it is exhilarating to imagine what the future might look like ten, five, or even a couple years from now. That said, our north star at Conestoga continues to help us navigate how we incorporate new technology: is this going to enrich the lives of our clients? We are committed to providing dependable advice and preserving a culture of service towards others. If new technologies better help us accomplish that mission, we want to be a part of it.
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