Editor’s note: Veteran entrepreneur, blogger and author Joe Procopio, who also is an executive at Durham-based Automated Insights, talks about artificial intelligence and natural language generation means to personal financial management.
DURHAM – When the experts discuss the merits of robo-advisors over financial managers, they’ll be quick to point out that the robo-advisor, a form of low-AI personal financial portfolio management, is popular with new and younger investors, and is gaining ground with lower-net-worth investors.
They’ll point to fees as the culprit. In other words, the robo-advisor is far less expensive, charging less than 1% of the value of one’s portfolio, as opposed to the traditional 1% to 3% charged by most professional financial managers.
They’ll also jump on the shift in user experience expectations from boomers to millennials. Younger people tend to do everything digitally and quickly, with as little personal contact as necessary. That’s how they shop, get themselves from place to place, order food, find lodging, and so on. On-demand, push-button, machine-recommended-options are just the way the kids do things these days.
As a counter-argument, the professional managers offer a more — pun intended — human touch. Their experience, their ability to research, and the option to call or email or visit the local branch are all selling points.
What the professional financial managers tend to miss is that the human touch, so often lauded as their unique differentiator, isn’t as human as it used to be. If professional managers want to reach and accommodate this new investor class, they need to be able to scale the human touch.
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