We often become so obsessed with the portrayal of personal investing as a product or extension of technology that we forget that wealth management is, at its core, a profession rooted in personal relationships.
Truly gifted advisors understand wholeheartedly that a client relationship is an ongoing dynamic interaction where the portfolio often is no more than the present tense of multigenerational well-being, purpose and aspiration.
Emotions are an integral part of a human existence.
When I sit down with clients I seek to understand each facet of their behavioral dynamics, as it is irresponsible to recommend and defend a customized wealth strategy without this fulcrum of relevance.
Countless studies have depicted the relationships and ambiguities that intertwine emotional stability and financial security.
When dollars are on the line, people react; my role is to understand the underlying dynamics that will allow me to increase the probability of an emotionally successful financial outcome.
This is precisely the reason that the recent slew of interest in robo-advisors is not a big concern for me.
At its best, technology can assist the implementation of a strategy, not its purpose or relevance.
Computer algorithms do have a place in the investment process — generally as a tool in the hands of a thorough and emotionally intuitive advisor, or the extremely unusual client who knows exactly what is needed and how it can be achieved.
I’m particularly fond of the term, “relevance,” not as a modifier but as a financial paradigm.
This is where the successful advisor is differentiated from an automated solution.
I believe that the only reason to invest is for the future, which is always unknowable.
Even with great attention to learning the emotional strengths and limitations of clients, we still are highly imperfect, so how likely is it that even the best AI model will achieve results that are both dependable and reliable?
My view is – not very.
AI has problems overcoming its own idiosyncratic biases, before even beginning to understand subjective inputs from emotionally erratic humans.
Sometimes the cost of managing your money goes beyond a fee listed within the fine print on a new account application.
There is comfort in knowing that your relationship goes beyond a signature and you’ve entrusted your money with someone who understands more than just portfolio optimization.
Ask yourself one question: in a market ripe with uncertainty, would you prefer a login and password or a person who intimately knows your financial history and is tasked with guiding its legacy into future generations?