Financial services are fighting robo advisors with emotional intelligence

Automation is hitting industries hard across the board. It is not just low level clerical jobs that are being lost, but entire businesses that are threatened. In response, many companies are retooling for the new economic era that technology has ushered in. The outcome of that fight for survival has at least one clear winner: the consumer.

Financial services felt the pinch of automation before many other industries. Robo advisors began to leach customers from more traditional financial institutions by offering similar services—tax filing, investing, and expense tracking—for a fraction of the price. For many consumers, particularly those who grew up in the digital age, not having to talk about their finances with a stranger was nice, too.

But today financial services businesses are betting that the human factor is actually one of the greatest advantages they have in slowing the advance of automation into other areas of the industry. David Miller, founder and CEO of PeachCap, explains, “Making decisions about your finances involves a lot of emotions. These choices can have an enormous impact on your life! But making emotional decisions about money leads to mistakes and miscalculations. A wealth manager’s job is really to manage emotions and help the client to construct their own financial emotional intelligence.”

In this way, growing numbers of professionals in financial services are following in the path of other industries—doctors, teachers, and lawyers to name a few. A doctor doesn’t just perform a surgery; they counsel their patient about making the right decision and help them to filter through their emotions. Teachers don’t just teach; they inspire. And lawyers don’t just argue a case; they support a client in a difficult time.

The antidote to automation may be humanizing services.

“Those that want to stay relevant in their professions will need to focus on skills and capabilities that artificial intelligence has trouble replicating—understanding, motivating, and interacting with human beings,” write Megan Beck and Barry Libert for Harvard Business Review. “A smart machine might be able to diagnose an illness and even recommend treatment better than a doctor. It takes a person, however, to sit with a patient, understand their life situation (finances, family, quality of life, etc.), and help determine what treatment plan is optimal.”

But how can the financial services industry leverage advice, professional counsel, and emotional intelligence more than they have in the past? After all, even before artificial intelligence, that’s what a financial advisor was supposed to be.

The key is to understand that clients will not pay financial advisors just to be human, they have to be human plus. Millennials don’t want to talk to a stranger about their finances. But a financial advisor who can help you identify your own financial emotional intelligence avatar and become a more effective investor is a different consideration.

“Emotional intelligence has to be presented to clients in an accessible way, one that elevates the role of the advisor to more than just a person who can relate emotionally,” explains Miller who also authored a book on the subject called Wealth Kryptonite. “Advisors need to be informed on the subject, have a plan to educate their clients, and be fully trained in leveraging that knowledge to help their client’s portfolio. Unfortunately, those skills are not being taught enough today and in the financial services space, not enough companies are putting their energies there.”

The robo advisor wave has not yet crested. As AI and deep learning become more sophisticated, the quality of robo insights and ability to coordinate across verticals is improving. Established wealth management firms are also beginning to adopt the technology and offer it as a service to their clients. But for the vast numbers of boutique firms and independent advisors out there, the future is about a human touch.