Cyborg Model Brings a ‘Warm Body’ to Robo-Advice

Cyborg Model Brings a ‘Warm Body’ to Robo-Advice

Computers are great at crunching lots of numbers and automating tedious tasks, which had many advisors looking nervously over their shoulders at robo-advisors when they emerged. But when it came to building trust and relationships humans won compared with the coldness of an algorithm.

The ‘pure’ robo-advice platforms have all struggled to win clients and find critical mass. But nonetheless automation is revolutionising the financial advice sector, as firms combine the powers of humans and technology in hybrid models, best called ‘Cyborg’ — part machine, part human.

Humans have empathy and insights into verbal and non-verbal communication. A human can detect:

  • Signs that someone is confused, or not understanding something
  • Conflicts between a person’s words and body language
  • When someone is relaxed, comfortable and able to proceed

Machines can’t reliably do these things at an industrial level — at least, not yet!

Nor can machines adjust their tone, pace or language based on the reactions of their audience. Sure, they can measure eye or mouse movements. But it’s not the same as a human recognising that subtle shift in the chair, that shows a client just left their comfort-zone.

We humans are, of course, a far more sophisticated and powerful machine than any that has ever been built. A human can walk blindfolded on a tightrope while singing random songs suggested by the audience while scientists are still struggling to get robots to walk on flat surfaces!

The human-mind’s algorithms are very broad and prone to making random connections. So, people have many ‘A-ha!’ moments, where they connect different pieces in a way that machines cannot.

Technology can only operate within its predefined parameters and rejects any data that is beyond those boundaries. Whereas a human mind can see peanut butter and jelly and think “Wait! What could happen if I put these two things together?”

Humans have also, traditionally, been better teachers or tutors — which is an important consideration in financial advice where clients often lack domain knowledge and need to be guided through material. However, the machines are getting smarter at teaching people with recent studies showing little difference in results between those tutored by a human or a computer-learning program.

But ultimately, the greatest benefit that the human brings to the advice might be their ability to be trusted.

On paper, we should be able to trust machines. They perform reliably, are not subject to biases and act without emotion, based on facts. So why do so many people hold a pathological distrust of machines and computers?

It’s not just because they’ve seen too many Arnold Schwarzenegger Terminator movies! There is a deep psychological effect at play.

Research has shown that most people have a fundamental mistrust of individuals who make decisions only by calculating costs and benefits in a strict rules-based system. In essence, they want to be treated with empathy and understanding in a system where the rules can be modified, or even changed, when their circumstances warrant.

I have been using FinaMetrica for over 17 years for onboarding new clients. They like the extensive value of the reports; but what we appreciate is the innovations in technology, the value of the client-facing materials and the development of the life-long client relationships as I get to really know their behavioral tendencies. FinaMetrica has assisted me in building a very successful practice and we highly recommend it for any advisor who wants to enhance the overall value of their client relationships.

Ron Wilkinson - Portland, Oregon, USA
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