Imagine overhearing this conversation between a financial advisor and his long-standing client:

Client: “Steve, I have to tell you that my business is not going well. I've hit the skids on last year's business goals and am going to flame out soon unless something changes.”

Advisor: “Oh, Jane, I didn’t know. Thanks for telling me. Is there any hope of getting things back on the track and avoiding the end game?”

Client: “There's always a possibility, but I won't put lipstick on the pig. We need to think through scenarios to ensure my personal assets aren't in jeopardy.”

Advisor: “OK. Well, thanks for telling me about this. So, let’s see what we can think through in light of this…”

Now re-imagine this same conversation between a robotic advisor, or "robo-advisor", and its client. It might go something like this:

Client: “Robby, I have to tell you that my business is not going well. I've hit the skids on last year's business goals and am going to flame out soon unless something changes.”

Robby the Robo-Advisor: “Being engulfed in flames is the least desirable outcome; would you like me to engage with the fire department?”

Client: “No, Robby, that’s not what… Never mind. What I am saying is that I am likely to declare my business insolvent soon. We need to think through scenarios. But I won't put lipstick on the pig - this is bad.”

Robby the Robo-Advisor: “I am sorry to hear of your business' termination point. Despite this, I do not recommend that you start selling cosmetics to livestock, I do not have data for this type of business.”

Client: “No, that’s not what I am saying, Robby! My business is failing and I need you to compute scenarios to ensure my personal assets are protected.”

Robby the Robo-Advisor: “I understand. Computations are commencing.”

It’s easy to see the difference between these two exchanges -- the terminology and conversation sub-texts that the robo-advisor simply can’t process. But stilted conversation aside, the fact that the robo-advisor is a computer doesn’t necessarily mean it would be less effective at advising the client on how to invest her money. If fact, it’s possible the robo-advisor would do a better job than its human counterpart.

But why do we have to imagine a robo-advisor in the first place? Because IBM already has, and its name is "Watson." IBM Watson is a cognitive computer that made its splash on the public stage by sparring against some very smart humans on Jeopardy in 2011. While Watson did very well against human opponents on the game show, it did make humorous mistakes, which illustrated that work had yet to be done before Watson will convincingly emulate the human mind. Since that time, Watson has continued to evolve and improve. Now the next frontier is to equip Watson move into the act of providing financial advice to human clients. In the era of big data, Watson has the capability of building a profile of a client and offering advice that is useful, empirical, and at least as good as what would be offered by a human. And Watson is never taking a commission or calling in sick.

If the financial adviser role is getting automated, what will be next? According to McKinsey & Company, the back office is already under a digital transformation such that decisions could soon be human-free in the near future. But some other interesting trends point out that the need for human interaction may not disappear everywhere in financial services. Consider the case of TurboTax. Since its launch, many people have chosen to do their taxes with the help of this program. Despite this, the number of people who choose to do their taxes with the help of a human preparer has held steady at around 56%. It appears some roles are ripe for full automation; others will only replace humans by a slight percentage.

Could the job of a Chief Executive Officer be done by a cognitive computer someday?

Perhaps. Before this century completes, we may see massive changes in companies' strategies because the cognitive-minded Chief Executive determined there were new synergies that weren’t realized during the last strategy, all without the involvement of a human decision-maker.

Could a fully automated company exist in the future?

We are now seeing that this is a real possibility. But would such an enterprise be one that is “better” in a meaningful way? Likely not, in my opinion. Humans are concerned with results. Computers can certainly give those, and in a way that reduces error and does not have an agenda other than the clients’ outcomes. With that said, humans understand other humans better than a machine can, based upon our shared experiences. Empathy is not something that can be automated. And empathy is what allows us to confide our dreams, or tragedies, in a way that helps us depict our future, financial and otherwise. In short, automation for its own sake may not always be the best way to evolve.

Like everything else in technology, time will provide the best insights. On the questions of robotic financial services and its best applications, we can say definitively - time will tell.

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