Want to Win the Robo Game? Think Like a Chess Champ: Envestnet CEO

Jud Bergman, chairman and CEO of Envestnet, the wealth management technology firm, has a message for financial advisors who fear robo-advisors and other technological advances in the industry: man plus machine delivers better outcomes than man or machine alone.

In other words, according to Bergman, who spoke at Envestnet’s Advisor Summit in Chicago, advisors enhance their value proposition for clients and are more effective if they use technology intelligently rather than fear or shun it.

He called this the “Kasparov Principle,” referring to the renowned Russian chess champion who famously played two six-game chess matches against IBM’s Big Blue supercomputer in 1996 and 1997. Kasparov won the first competition and lost the second, but only because he assumed the machine knew something that he did not when Big Blue actually threw away a move due to a glitch.

After that realization Kasparov began to play a new type of chess known as “freestyle chess” or  “advanced chess” where players can use computer programs in matches against other players and computers, explained Bergman. Following that approach, a couple of amateur chess players using three computers won a 2005 tournament, beating out not only the supercomputer but also grandmasters.

“The winning strategy for [the advisor] profession will look more like freestyle chess,” said Bergman. “Smart, wise experienced advisors are made more effective by technology.” They have more time to spend with clients and to think strategically and creatively, said Bergman.

Bergman noted that advisors who use “integrated technology” spend 20% more face time with clients and twice as long with prospective clients, “creating an astonishing level of business growth.” They are crossing the “digital divide” that separates other advisors and their practices from a more complete engagement with their clients, according to Bergman.