We all know advisers need to embrace technology. Advances such as artificial intelligence (AI) are vital to the future of our industry and our ability to help make a positive difference to millions of people’s lives.
I’ve been especially vocal about this issue for some time now. As I’ve explained many times, I regard the effective use of tech as fundamental to the quest to be a happy adviser.
But the key word here is “effective”. As I was reminded recently, there’s a phenomenon known as the paradox of innovation – the risk that new ways of doing things ultimately prove counterproductive.
It’s basically a case of unintended consequences. Scour even the past century or so and you’ll find spectacular instances of seemingly great ideas bringing unwelcome repercussions.
Take the introduction of 120 cane toads to Australia in the mid-1930s. The plan was simply to see off a pest of beetles, but the toads multiplied so rapidly that they disrupted and destroyed whole ecosystems.
Maybe the most striking illustration of unforeseen eventualities can be found in the splitting of the atom. The initial goal was to confirm Einstein’s theory that E=MC2, yet the most significant corollary was the development of nuclear weapons – which brought, in turn, the perpetual threat of annihilation.
Cautionary tales like these highlight the perils of giving insufficient thought to where our choices might lead when we seek solutions or break new ground. In short: we need to tread carefully.
I’m not suggesting, of course, that the adviser community is poised to trigger a far-reaching trophic cascade or invite mutually assured destruction. Yet it’s reasonable to say we could unwittingly create a lot of problems for ourselves.
The incident that really opened my eyes to this prospect was a demonstration of a software package capable of processing and filtering conversations between advisers and clients. It produces a full transcript of the discussion and also rattles off a summary of the salient points.
I quickly began to suspect the program wasn’t expressly designed for the UK, less still for our adviser population. Why? The transcripts were full of American spellings. That alone set alarm bells ringing.
An even more worrying thought then occurred to me: could the generation and storage of comprehensive electronic records of every face-to-face meeting between advisers and clients have any negative implications? Upon reflection, I decided it could.
For example, who might have access to all this material and the wealth of personal information it contains? Where would data protection enter the reckoning? Could we expect bona fide guarantees in relation to security, sharing or selling on?
And what if the regulator were to take an interest? What if every one of these transcripts were scanned – most likely by another form of AI – for omissions, oversights, what was said, what wasn’t said and all the rest?
This isn’t paranoia. I’m not implying for a moment that advisers – or clients, for that matter – have something to hide when they get together for a chat. I’m just pointing out that ill-conceived, bolt-on-style tech is more likely to hinder us than it is to help us, not least over the long run.
Believe it not, my team and I encountered almost precisely the same issues during subsequent demonstrations of similar software. The bandwagons are obviously doing the rounds.
The good news is that we’ve since come across a couple of systems that achieve the necessary balance. They recognise both what humans do well and what tech does well. They combine respective strengths. Rather than merely pretending to have al the answers, they actually do something useful.
This “best of both worlds” approach can help empower advisers. By contrast, the half-baked offerings described above could all too easily play a part in overpowering us.
The fact is that in this arena, as in any, some tech products are better than others. To put it a little more charitably: some tech products are better suited to our needs than others. It’s therefore essential that we sort the wheat from the chaff.
Perhaps we should treat the challenge with the same rigour we bring to investment decisions and other considerations for which clients rely on our guidance. We need to do our research, diligently weigh up all the pros and cons and arrive at choices that are as fully informed as possible.
I should stress before signing off that I still have tremendous faith in tech’s capacity to transform our industry in a way that should benefit multiple stakeholders. But let’s embrace this brave new world with a sensible degree of caution rather than staggering into it with our arms outstretched, our eyes closed and our critical faculties switched off.
Andrew Goodwin is co-founder and CEO of Truly Independent and the author of ‘The Happy Financial Adviser’.
