The 1040 giant spent $10 million a minute to tout its “robo return” partnership with IBM’s Watson artificial intelligence systems. But through all the flashing lights and swiping screens, a familiar human face is still essential when it comes to making the sale.
From a wealth management perspective, the most interesting thing about last week’s Super Bowl -- other than the fact that Lady Gaga’s fans are now old enough to qualify as mainstream -- was H&R Block’s splashy rollout of artificial intelligence.
According to the commercials, the chain’s roughly 70,000 return preparers will have Watson looking over their collective shoulder this tax season.
Those who’ve followed the rise of “robo” portfolio management should recognize the high-tech marketing message, but in this case there’s a huge twist.
With the H&R Block version of “robo,” the human -- in the form of Don Draper himself -- remains central to the commercials as well as the client relationship.
If you were looking for proof that you have a place in a world of A.I. advice, that should be the last bit of evidence you need.
Bigger intelligence, kept in the background
H&R Block is so committed to its partnership with IBM’s Watson that it came back to the Super Bowl for the first time in nearly a decade to crow about it, paying a reported $5 million per 30-second spot in the process.
They’ve got a reason to brag. Tax prep is a heavily rules-bound process that lends itself to automated support. Roughly 70,000 seasonal employees already rely on the in-house platform to catch math errors, prompt client discovery and suggest missed deductions.
Adding Watson to the mix really only gives the platform an upgrade at this point. Refunds may get a little bigger, IRS bills may get a little smaller and most importantly, each return should hold up to audit scrutiny a little better.
Fewer audit challenges means happier clients and better retention. Over time, that year-to-year edge translates into better long-term outcomes, creating a virtuous competitive cycle.
The technology stays behind the screen. The preparer pushes all the buttons and asks all the questions. Most importantly, the client has to come into an H&R Block office to get the benefit of the system.
That focus on brick and mortar isn’t odd at all. Block already facilitates around 7 million purely automated returns a year via its website and desktop software. While those filers can pay extra for a human to review their work, most of the numbers are simply calculated from the numbers provided.
But maybe 13 million people a year prefer to talk to a human. Whether they aren’t comfortable with the computer interface or are simply lonely, no amount of convenience, cost breaks or even the promise of richer refunds has managed to break that bond.
Block isn’t getting in the way of that bond. It’s the linchpin of a $3 billion institution. If anything, it’s using the technocratic sizzle around Watson to drive e-filers back into the brick-and-mortar channel.
That’s why Jon Hamm remains the literal face of the company, even in its most pixel-heavy ads. From their perspective, the important thing isn’t eliminating human touch and human frailty but reassuring clients that there will still be someone on the other side of the screen born of flesh and blood.
A somewhat smarter, more accurate person, admittedly. But a person who understands the typical filer’s concerns, corrects for the common lapses, brainstorms ways to make next year’s return better.
Block is liberating its people from a little more of the brute pencil work to focus on maintaining mutually constructive long-term relationships.
That’s exactly what wealth managers armed with template portfolio allocations, automatic rebalancing and intelligent CRM can do.
When these tools replace the traditional advisor relationship, you’re probably going to make a lot of people unhappy sooner or later -- at best, they’ll chase the sleekest robot in sight, at worst the programming will fail to compensate for real-world market psychology and end up crashing when clients need it most.
But as a way to enhance an advisor’s capabilities, everyone has the potential to build better outcomes. The advisor can serve more people, address their financial goals more effectively and, in theory, make more money one way or another.
It’s the equivalent of H&R Block’s claim that artificial intelligence ups the odds that a given client can actually “win” at taxes through multiplying minuscule edges. After all, that’s how all advisors strive to generate alpha and add value, right?
None of that works without you watching the platform and correcting when necessary. Humans are walking exceptions and your job -- like Hamm in the commercials -- is to communicate. The next level of A.I. advice
Where the Block deployment gets interesting, of course, is in Watson’s ability to learn from experience.
The system is going to look at an estimated 11 million returns this year. It’s going to find patterns and suggest ways to improve the overall discovery and filing process.
Next year, the humans are going to work from improved scripts. They’re going to ask better questions, spot more audit flags, use their appointment time more efficiently.
The enhanced process probably feeds into the online experience, strengthening relationships on that side of the company as well. But it starts in the brick-and-mortar offices where humans spontaneously interact.
In this light, a good robo system ultimately trains us to get better at the things only we can do. That’s something the online-only wealth management platforms will never be able to match, because they never had humans actively integrated into the process in the first place.
A brute asset allocation program can only juggle the holdings. It can’t gauge an account holder’s real degree of risk aversion or figure out that a retirement plan is going to need revision when life circumstances change.
And despite being a relatively “humble” tax prep platform, H&R Block is already running rings around that proposition. We’ve said it again and again: let the pure robot players come and go. The future belongs to advisors with human faces, human hearts and the best brains both worlds have to offer.
(As for Lady Gaga, yes, she’s been around since the 2008 crash. Her 13-year-old fans back then are getting jobs now. They’re adults. And from here, the post-crash world becomes more and more mainstream as the distant past recedes. Choose which world your career inhabits.)