Will robots steal your clients?
Throughout history, predictions of widespread technological unemployment have failed to come to fruition. Will fears about the latest wave of technology — robotics and artificial intelligence — be any different
Throughout history, predictions of widespread technological unemployment have failed to come to fruition. Will fears about the latest wave of technology — robotics and artificial intelligence — be any different?
Technophobia is a recurrent theme in the history of economic progress: Pericles spent huge sums on major public works amid fears that new technology would lead to mass unemployment; Elizabeth I denied a patent to a knitting machine, convinced it would turn her subjects into beggars; and in 1964 a group of Nobel prize-winning economists alerted President Johnson to the dangers of “the automated self-regulating machine”.
Today, we see the risk to most jobs from automation as low for the foreseeable future. While certain segments of low-skilled workers may be vulnerable, we tend to an optimistic view of mankind’s ability to respond to technological disruption.
Yet the fear is there. In a survey of 1,896 experts from a variety of disciplines, 48% expected technology to displace more jobs than it creates by 2025 (Pew, 2014). Most of the doomsayers are techies, while most of the optimists are economists and historians. But optimists and pessimists agree that the change is going to be more rapid and the economic impact greater than we’ve seen before.
Is a robot on its way to take your job?
Most jobs invariably involve a multitude of tasks. If a machine could perform every task performed by a certain profession, then automation necessarily reduces employment in that profession. But if a profession is only partially automated, employment could well increase (so long as demand for the combined output increases as prices fall).
For example, in the US there are more cashpoints than human tellers, but there are still twice as many tellers today as there were in the 1970s when cashpoints were first introduced (Bessen, 2015). Cashpoints drove down branch costs and improved the productivity of tellers after they were relieved of the mundane task of counting out money. This allowed banks to open more branches.
The human touch
For an adviser, it’s the human experience that matters most. As many advisers readily acknowledge, robots will be able to deliver highly analytical, quantified and repetitive tasks, like carrying out portfolio valuations or calculating rates of investment return. Clients expect effectiveness, expertise and financial results, and robo technology can help deliver them.
The steady introduction of new technology could free up an adviser’s time to do what they are best at – creating a meaningful dialogue and building a sustainable relationship with a client. However, when it comes to social intelligence, empathy, intuition, understanding, listening and reading between the lines, only a human being can deliver these skills effectively. Advisers develop a rapport and trust over time, refining advice as circumstances change. Robots simply aren’t good at holding meaningful in-depth conversations.
A trip to London’s Science Museum to see its collection of some of the world’s most advanced robots would provide some welcome relief to the technophobic. On the second weekend of the exhibition most appeared to have fallen into a state of technological catatonia. Baxter, a robot adept at sorting and packing, is even programmed to show emotions to help him interact with human colleagues. When we first met he was confused. When I checked on him 20 minutes later... still confused.
Complex economic simulations, depending on their parameters, suggest a wide variety of outcomes in the race between man and machine, but they almost universally conclude that the average worker will likely end up taking home a decreasing share of total income (Benzell et al, 2014) as humans become more reliant on machines for the continued improvement of their productivity.
Automation versus ageing
Still, the automation debate needs to take into account another great conundrum of our era: ageing. With an ageing workforce, machines may claim some jobs, but the pool of workers to apply for them will be shrinking anyway. Furthermore, as the older workers retire they tend to become greater consumers of services than goods. Services require more human interaction, healthcare being a prime example.
An ageing population will inevitably mean a longer time spent in retirement, and this will give rise to the need for significantly more financial planning advice. Issues such as how to pay for later-life care, or the best way to pass capital tax-effectively to the next generation, will need to be addressed.
The young, though they may be happy to research, choose and buy financial products online, may even prefer human contact to the continuous typing involved in a web chat.
Threat brings opportunity
The relationship between jobs and technology is far more nuanced than many commentators appreciate. This should provide some reassurance to clients who might have feared that their children or grandchildren face a life of robot-induced penury. Interaction with Baxter at the Science Museum suggests that any such dystopia is decades away. We have faith in mankind’s ingenuity and believe that technology will unleash as many new employment opportunities as threats.