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August 31, 2015 at 08:00 PM
What can financial advisors do to stay relevant amid the growing availability and sophistication of robo-advisors? In contemplating that question, consider the strange story of ELIZA, a computer program developed in the mid-1960s.
Programmed by MIT computer scientist Joseph Weizenbaum, ELIZA simulated a type of psychotherapy that emphasized open-ended questioning. A person might type, for example, “I am feeling nervous” and get a reply from the computer such as “Do you believe it is normal to be feeling nervous?”
This project was intended as an experiment in computer processing of everyday language. Yet to Weizenbaum’s surprise, the program often got people to reveal a lot about their emotions and concerns. Some users seemed more comfortable opening up to ELIZA than they might with a human therapist.
Bear in mind that this was half a century ago; at just a few thousand lines of code, the robo-therapist was primitive by today’s computing standards.
Weizenbaum, who died in 2008, spent his later years as a cautionary voice in computer science, warning that people might become overly reliant on technology. Nevertheless, ELIZA spawned increasingly advanced versions, and some are now offered in earnest as tools for dealing with psychological problems.
For financial advisors, the above story may be disconcerting. An advisor’s ability to form relationships is increasingly cited as the key to retaining clients against competitors, including robo-competitors. But as ELIZA and its successors have shown, people sometimes will be attracted to having a relationship (or what seems like a relationship) with a computer instead of one with a human.
Underrated Humans
For advisors eager to understand what it takes to be competitive in the advice business (and other fields) as computers take on a growing array of tasks, I recommend a new book: “Humans Are Underrated: What High Achievers Know That Brilliant Machines Never Will,” by Geoff Colvin, senior editor at large of Fortune magazine (the book is published under the imprint Portfolio/Penguin).
The skills that will be valued in the workplace increasingly will be those of human interaction, in Colvin’s view — abilities to work in teams and to understand what other people are thinking and feeling. “Being a great performer is becoming less about what you know and more about what you’re like,” he writes.
The “newly valuable skills” are those of “empathizing, collaborating, creating, leading, and building relationships,” according to Colvin. Organizations focusing on such skills range from Google to the Cleveland Clinic to the Navy Fighter Weapons School (known as Top Gun), in examples he cites. Understanding people is crucial in the whole range of human interactions, including ones as hostile as an aerial dogfight.
However, Colvin acknowledges, building such skills may be challenging. Women might find it easier, on average, to do so, he argues, though he also notes that there is enormous variation within genders. “Life will be increasingly tough” for relatively asocial people who once might have held “solid middle-class jobs in factories or back offices.”
He also makes an interesting, counterintuitive case that participation in social media can be detrimental to forming connections with people, as the interactions are often superficial. He cites research suggesting that people who spend much time on social media experience declines in empathy.
