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Advisor Ex Machina?

by Jarl Smidt­Olsen

“One day the AIs are going to look back on us the same way we look at fossil skeletons on the 

plains of Africa. An upright ape living in dust with crude language and tools, all set for 

extinction.”

― Nathan Bateman, EX_MACHINA

A few months ago I accidentally watched rather a good movie on the plane. I felt a great affinity for this movie, EX_MACHINA, because, a) not only was it written and directed by somebody I knew from my high-school years, Alex Garland (he who wrote The Beach..) and b) it was almost entirely shot in Norway (and I am one of those few lucky chosen ones..) but also c) it also dealt with a very interesting issue - namely the Turing test.

As you may know, the Turing test was developed by Alan Turing in the 1950’s, and has become one of the key concepts in the field of Artificial Intelligence. Without ruining the plot of the movie, two of the characters, Ava and Kyoko, both pass this test in spectacular fashion.

The current crop of Robo Advisory offerings - Robo 1.0 - do not stretch the field of AI too far at all. This first crop of Robo offerings is typically more focused on guiding the client into one of a handful of ETF portfolios - and doing so cheaply. The next generation, Robo 2.0 attempts to take into account a bit more information about the client, and design the Portfolio bearing in mind the client’s preferences and constraints. The next crop after this, may well take into account tactical signals of some kind to adjust the portfolio further to perceived risks in the market - by for example running a target volatility overlay strategy. Each progressive iteration of the Robo Advisory offerings will offer the clients a more dynamic, responsive portfolio management service.

So, to what extent should a Robo Advisory solution even attempt to pass the Turing test? Is a full AI Robo the holy grail, or are clients more comfortable with a solution which clearly advertises its limitations and doesn’t pretend to be anything more sophisticated? Or is the answer more nuanced, can, as in the movie, a relationship and connection be built - even though it is obvious to the client that they are dealing with AI?

Our stance is that it is rather better to view the client offering as a Robo + Advisor combination - a Bionic Advisor - where the benefits which the sophisticated Robo facility offers is seamlessly combined with the human qualities of the Advisor. The client may not know or realize which part of the Bionic Advisor is powering which aspect - but they may still feel more comfortable knowing that there is a human heart somewhere in the relationship.


To hear more about the Privé Managers system, and how we can help transition your business to a Bionic Advisory model, and you into Ava, please contact us today on sales@privefinancial.com.

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