Across this three-part series, I’ve sought to help move the conversation in our profession around AI from a tool for our own efficiency. To do a complete 180°, shifting focus from how advisers use AI to how clients will.
Ultimately, this goes beyond reducing costs and saving some time. This goes to the very viability of advice practices planning to grow into the future.
To recap, in Part 1 of this series, we met three AIs as portrayed in Sci-Fi, highlighting that some of the things we’ve long considered ‘uniquely human’ may not be. The ability of AI to connect and bond, to speak to emotions, to reassure, are all commonplace for AI in these worlds.
In Part 2, we come back down to present-day Earth. We took a look at the very real examples from AI powered pioneers in this space, who are indeed looking to connect and bond, whilst being able to speak to emotions and reassure. Given these examples, it’s clear our sci-fi examples aren’t pure fiction. In fact, it’s a matter of when, not if. Abundant availability of such tools with deep capability is inevitable.
Whilst we touched on some actions you can take today at the end of Part 2, namely focusing on efficiency and building material you can use to train AI to assist you, we’ll be going far beyond such obvious wins.
This final instalment is set to challenge you. Those who don’t evolve, risk going extinct.
We will be taking a step back, and can hopefully inform the decisions you make today for where you want your business to head over the coming five to ten years. Be warned, some aspects may not be comfortable for some readers.
The sound of inevitability
The key premise here is the sense of inevitability.
It seems obvious, and few will challenge it, but at the end of the day most advisers shrug it off.
“That’s a 2035 problem lol”
“My current clients will still love me, so I’ll be OK.”
“I’ll be beyond caring by then.”
“Sounds big, but nothing I can do about it now.”
“Some tech will solve it.”
“It’ll be hybrid, humans will still be the centre because …”
There’s some truth to many of these, but they’re incomplete at best.
To assume we can’t do anything is wrong. To assume hybrid AI/human models will outperform humanless in most circumstances is dangerous.
To assume a human service will always be a better service is wrong.
An AI based solution WILL one day:
- Be free (or at least at no marginal cost for most people).
- Be instantly available to answer questions, educate, reassure, and more.
- Be adaptable to your preferences and learning style, without you even being aware.
- Be considered independent.
- Be perceived by many to be smarter than you.
- Be able to provide broader advice (strategist/CFO to solicitor to accountant)
- Be proactive, responding to events you didn’t even know happened.
- Know more about the client than you do.
- Know how to read microexpressions better than you.
- Know their heart rate when they look at shares.
- Know what they’re reading about online.
- Know if their client has had a rough day.
- Listen better than you do (probably).
- Have more energy than you do.
- Have deeper pockets than you do.
- Use the very latest tech.
By contrast, a meatbag adviser is expensive, slow, rigid, biased, dumb (arguably), narrow-minded, reactive, clueless, a bad listener, and lethargic.
In many respects, these abilities to build bonds, access data, and more can make AI better at the things that we typically thought would be our edge.
Whilst we’ll still have the feeling you get from a warm handshake, a kind 3D smile you can see in 3D, and relatability, it’s not automatically going to be considered superior any more.
Generic mediocrity will eventually go extinct
Right now, a good job is good enough.
There aren’t enough advisers to meet present demand. Presently, there isn’t an alternative to human-led advice. Alternatives are variations of DIY at best.
Being solid at what you do, targeting Mr Joe Average*, being pretty friendly and relatable, having a good dose of empathy, not charging an arm and a leg, are not points of difference, but are probably cumulatively good enough to get by. This will continue to be true for some time, until the inevitable shift starts to take place.
*Note: If your niche is Mr Joe Average, but only when he’s about to retire, you do not have a niche.
For some prospective clients, there won’t be any change. Some prospective clients will always want a warm handshake or simply won’t trust an inhuman alternative. Just like how some people need taxis due to access or a disability, or simply prefer taxis, while most catch an Uber. Whilst those exceptions exist, I still wouldn’t have wanted to have my money in taxi plates in 2012. Anchoring to such exceptions is dangerous.
Being valuable
More important than being real, is being valuable.
Being real or human may be valued by some, but it’s not a safe harbour in and of itself.
As humans, we’ll inevitably be at a disadvantage by default. We may be able to leverage AI ourselves to close some of the gap, we may be able to build our own Hannahs to help, but we’ll still be the bottleneck.
Some aspects of what we do today or could start doing tomorrow may be more valuable than ever. When these are valuable enough, they can outweigh the disadvantages that come from our slower and dumber meat brains.
So, what will remain valuable?
I’ll cover several key areas that will help keep you relevant, and what you can do now to pursue them. Specifically, these are:
- Niche, hard
- Be part of a community
- Leverage your role as an intermediary
- Have an amazing client experience
- Engage on values to outperform performance
Many aspects of these interrelate, and all of these elements elevate your firm for broad benefits far beyond preparing you for inevitable ubiquitous AI advisers.
1. Niche, hard
What it is
If we think back to a pre-internet world, where a ‘noisy marketplace’ was based on someone else being able to afford a larger Yellow Pages ad than you, some major adaptation was required then too.
One strategy that has increasingly proven valuable in a competitive marketplace is targeting a specific niche. The narrower the niche, the better. Jacqueline Barton from our sister firm, Simply Advice Websites, has written well about this here.
Why it will help keep you relevant
The more narrow your niche, the more likely it’ll be that you’ll know something the AI or Google will not. The less applicable generic advice is to an individual, the more valuable a specialist would be.
An element of niching is more branding-centric. If you’re targeting single women between 30-34 who have incomes over $180,000, that enables a very specific messaging that can resonate. (We’ll loop back on this later when we hit ‘Community’.) But, in either case, AI will be well positioned to handle much of the advice needs accurately.
Many such specialisations can exist where the needs of those individuals differ strategically or tactically. These can include:
- Family office, where the volumes of money make generic advice irrelevant.
- Cross-border advice, where the interrelation of overlapping systems can change rapidly, be nuanced, and the cost of error (or hallucination) can be high.
- Exclusive products or offers, such as those received in certain sectors of the public service or with employers offering non-standard offers.
- Executive advice, where share schemes can distort typical recommendations.
- Business owners, where the interrelation of complexity can make generic advice meaningless or even dangerous.
- Disabled persons, who can access a suite of non-standard structural legal or service benefits.
- Religious-based advice, where applying generic advice may be a breach of spiritual requirements.
For most of these groups, much of what they would Google now, and would be fed from an AI today, would be wrong or irrelevant.
You can also go beyond messaging, and implications on your advice itself, and consider other persistently valuable aspects of a strong niche.
- You may understand career pathways in that niche better than your clients do.
- You may be able to share what you see for salaries from peers elsewhere.
- You may be aware of arrangements available to others within a niche (typical contracting arrangements for non-employees, typical licensing or franchising schemes, business structures that are advantageous in certain settings, etc).
- You may be part of their community. Possibly physically, possibly by proximity to a key location, possibly through commonalities.
What to do
If you don’t have a niche, get one. If you have one, consider drilling further into your unique strengths.
2. Be part of a community
What it is
Building on niching, being part of a community is something an AI cannot do. In an increasingly tribalised world, the option to work with someone in my community who shares my values, could be worth paying a premium for.
This can be a community in a traditional sense, be it based on geography or commonality. It could be a movement you believe in and tap into.
It could be a community you have built, around yourself, a belief structure you’ve created, or just a series of habits you’ve accumulated. (Anyone else know of Barefoot Investors being identifiable by their labelled ING bank cards?)
Why it will help keep you relevant
If you contribute to a community and are a prominent member of that community, people who consider themselves part of that community will be more likely to value what you do. They are more likely to respect your knowledge.
What to do
Consider how to go beyond a niche, and contribute to the communities you are genuinely a part of, or would genuinely wish to contribute to.
As an example, my passion for advice and the work I try to do with these blogs, is something I consider a contribution to the community.
You can consider if there is a community organisation you could contribute to. Could be any combination of a special interest group, movement, charity, church, school, workplace, union, neighbourhood watch, or several other directions. You could consider how you can contribute to those, whilst also helping to become more prominent within them.
3. Leverage your role as an intermediary
What it is
Many professions lean on the role of an intermediary, and advice will continue to have scope for this even when omni-capable tech megalords can give great advice, they won’t have the access you have.
Be it access to limited investment offers, wholesale rates, ability to lean on a service provider, claims management, or other outcomes driven from your role and scale, they offer a point of difference.
Why it’ll help keep you relevant
We can see the value in this with an example from luxury.
You can’t just walk up to Hermès and buy a Birkin or a Kelly bag off the shelf.
They aren’t just expensive, they’re exclusive. If you want one, you have to have a relationship with the brand. This ties in with belonging and identity, and can give a sense of gaining more than just information, which has become ubiquitous.
4. Have an amazing client experience
The earlier items feed into this, and can inform how you would structure an amazing client experience.
What it is
A memorable experience, a pleasant experience, and exclusive experience, can all contribute to an overall client experience that cannot be easily replicated.
We know people pay for experiences, practically every single luxury brand out there works on this basis. Service is amazing, there’s champagne, there’s gifts, there’s favours, it’s a whole thing.
Airline lounges, cruise lines, and hotel chain clubs all go above and beyond to make you feel special. They may be irrational from a purely economic perspective, but people do it anyway.
People pay more for the experience. People pay to say and show they have the luxury brand. They pay more than is logical.
Being mid, being on par with a good dentist, won’t differentiate you from the AI.
Why it will help keep you relevant
I recall once, how a client would like keeping a large underperforming cash account, because they’d receive an annual check-in, where they went to some top floor, had really nice coffee, had an amazing view, and were treated like rock stars.
I calculated the opportunity cost of this experience to be $4,000 to $8,000 per annum.
They knew it deep down, but if I hadn’t put it in black and white to them and coupled that with some examples of the experiences you could get for that money instead, they wouldn’t have changed it.
If you have experiences that are next level, that are amazing, that make your clients feel great, you’ll have something they may be inclined to pay an irrational sum for. Something, the AI will never do.
Within the concept of experiences, it’s also worthwhile considering the prestige that having a human adviser may well bring in time.
Similar to how someone may drop having a relationship with a bank manager or their private banker, increasingly having a human financial adviser may well be a mark of wealth.
For this to ring true, the firm would need markers of wealth to match. Schmick location, sharp brand, polished website, dresses sharp, that sort of thing.
What to do
Make your client experience genuinely special at every step.
Consider the basics
Be happy to take every call, make sure every call answered opens with a welcome aligned with your niche (positive and bubbly, or friendly yet professional, either way do it for your niche).
Make sure you’re on time, every time. Be ready if they’re 15 minutes early.
Consider your audience. Good coffee, good tea, good wine for an end-of-day appointment if that atmosphere works for you.
Run exclusive events, webinars, workshops, use your networks to bring access to your clients that they couldn’t get otherwise (building on the intermediary leverage above).
Go truly above and beyond
Consider out of the box ideas, such as unique gifts (not just a check-a-box exercise of welcome-wine), unique engagement opportunities.
These may be something you consider expensive, but they can go towards making you different to the AI. Some clients won’t value them (and they may be the first to go), and others will disproportionately value them (and they’ll be the ones to stick).
To dive deep into this would require this blog into Part 4… but there is something for you. Find it.
5. Engage on values to outperform performance
What it is
Once again, another mutually complimentary recommendation, is based on bringing in some of the elements to the relationship that go far beyond superannuation rollovers, insurance policy selection, tax savings, estate maximisation, or investment outperformance.
This goes to values, which can often be a luxury concept.
Take Socially Responsible Investing (SRI) for example. Limiting your investment universe to those areas you consider acceptable could be considered a luxury only available to those who feel very financially secure.
That said, I’m not saying to simply have some ethical investing considerations or filters in your process.
I’m suggesting you have conversations around values. How clients vote with their wallet, is based on values. The choices they make with their portfolio can indeed be driven by values, especially once you move beyond just trying to get by.
Why it will help keep you relevant
Whether or not AI will be better than humans at this, one study at least suggests that humans will perceive services delivered by algorithm through a lens of authenticity. This matters less for analytical functions, but becomes more relevant when that service (or advice in our case) should consider values.
[Jago] finds that when encountering products or services delivered by artificial intelligence algorithms, individuals often react and interpret the interaction through the lens of authenticity.
Commentary on ‘Algorithms and Authenticity’ by Arthur S. Jago (2017), provided by Glenn Carroll (2019).
Compared to humans, an algorithm’s perceived authenticity is lower, although most of this occurs because of low perceived moral authenticity.
To restate casually, individuals are fine with algorithms performing analytical functions but less happy when they are doing things that people believe should take into account the values and moral principles inherent in sentient beings.
This also ties in nicely with the concept of challenging clients, working with them to make them better, more consistent with their own values or better able to achieve their own goals. This was one of the shortcomings of AI highlighted in Part 1 of this series, with the AI Joi telling her user what he wanted to hear.
Other exceptional strengths
There may be things you can do, that you do better than both the most advanced AI and other humans. This may be something at an extreme, but will increasingly be a ‘special sauce’ you can lean in to.
You may be incredible at helping people uncover their relationship with money.
You may be awesome at inspiring others to be their best selves.
You may have the definitive process that helps clients solve their whole financial universe.
You may be truly exceptional at any number of things.
To outperform both AI and humans, you’d need to be well above average on most fronts. If you do have such a strength, lean into it.
Use it to inform your niche, your community, and your client experiences. Make it clear on your website, consider it in your process design, and seek team members who support that strength. That can indeed be your point of difference, and those who need or value that will pay for it.
What’s not on the list
Tellingly, there’s a lot of things which aren’t on the list.
As mentioned in Part 2, being more efficient, being faster, leveraging AI yourself, will help keep the gap between your meatbag brain and the AI from being too great to bear. (Subscribe below if you haven’t already, as we do love sharing our efficiency learnings!) However, for so long as you’re involved, you’ll be slower and costlier.
Other things that are deliberately not on the list:
- Service with a smile
- All ’round solid
- Improved qualifications
- Technical strength
- Proximity (merely being local)
- Backed by a large licensee
- Best. SoAs. Ever. <- Read in SpongeBob voice.
In a world where (marginally) free, pre-existing, known, trusted, super-intelligent, AI is inevitably ubiquitous, these won’t be what make the difference.
Hand crafted = Prestige
One thing that may spring to mind, is that all the above measures are more expensive to implement. Some clients will value them and pay more accordingly, and many won’t.
The initiatives above cost more to deliver than merely ‘basic, but solid vanilla’ advice would require.
Unfortunately, those who won’t pay more for these services, also won’t pay for the prestigious privilege of a slower and more expensive adviser who handcrafts their financial advice.
It’s a big shift in mindset.
So, let’s take an analogy from fashion once again. Imagine this:
You’re a leather artisan, you’ve been crafting leather goods for decades, you’re good at what you do and you’ve been serving all walks of life that come into your shop. Sometimes you’d make solid functional goods, sometimes prestige custom pieces.
Then bam. Mass manufacturing of leather goods hits you like a steam engine at full throttle.
The people that paid you because they needed you and didn’t have a much better option, will go for the factory-made goods.
The market for the prestige custom goods doesn’t drop off, and becomes an increasingly dominant proportion of your clientele whether you like it or not.
What do you do?
I’d suggest you lean into it.
Move to a nicer area since you don’t need to be near the working class anymore. Level up your experience, focus on form over function, and emphasise quality over cost, all to align more closely with the clientele that continue to value your skill.
You become something akin to the modern brand, Hermès.
This change, this shift, to the financial advice equivalent of the above will feel uncomfortable for many.
However, when you become the expensive alternative, you need to create a perception of value that aligns with that, or else you’re just an unnecessary cost.
You can choose to embrace it, factoring it into your long-term planning, informing your investment priorities, and considering it in your pricing model. Or, you can roll the dice and hope the inevitable will take long enough to arrive that you won’t care any more.
My head hurts, make it stop please
Head hurt a bit?
How did we get here?
Let’s recap the logic.
- Sci-Fi painted a picture where AI creates bonds, builds relationships, and is a trusted source. This removes what many considered to be a safe harbour. A warm smile, a reassuring voice, a trusted friend, are no longer traits exclusive to humanity.
- Looking at what’s currently available, it becomes clear this is happening now, and ubiquitous access to AI capable of providing financial advice, whilst also being a trusted adviser and friend, is inevitable.
- In a world where this is inevitable, solid but mediocre firms will either become obsolete or overshadowed by their shortcomings as they compete with an unbelievably capable, free, and instant AI competitor. Only those whose strengths provide differentiation will be able to justify the 100x+ premium you pay for hand-crafted financial advice from a human and avoid the fate of being an unneccesary cost.
Pivoting for the long term
Almost all of the above ideas for implementation were pre-existing ‘good’ ideas. The difference is, instead of being best-practice items, these and more I’ve not raised may be the difference as you increasingly work with clients that have AI in their pocket which is smarter than you are.
If you’ve got a clear niche, you’re contributing to your community and have a tribe who knows you, and you have an amazing client experience, this may just be the motivation you need to lean in even harder.
If you’re currently average, working with average clients, doing average stuff, and anticipate you’ll be able to comfortably do the same in ten years time: I hope this presents a challenging logic that can inspire you to do more. To be different. To outperform the AI, because it is coming. Take action, and pivot.
Once it’s here, an average so-so adviser will be an expensive luxury out of alignment with an average so-so service model.
Further reading:
- Hermès, via Acquired. Much of what I know about Hermès comes from this great episode of one of my favourite podcasts. It’s a great story and a great listen.
- Commentary on ‘Algorithms and Authenticity’ by Arthur S. Jago (2017), provided by Glenn Carroll (2019).
Given you’ve gotten this far, I’m mindful this has been my longest written series to date, so thank you. These take a long time to put together. I hope it’s been a valuable and insightful experience for you.
If you did find this valuable, please support work like this by sharing with a friend or colleague or posting on LinkedIn. It helps me to identify the value of this work.
Otherwise, let me know what you think in the comments below, or ask any questions on the topic you have. I’d love to continue the conversation.
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