Laureate was being interviewed by one of the leading media houses where he gave his opinion on the rise of Robo-advisors. He said that the role of human advisors in the financial industry is to carefully understand what the client wants and deliver just that. One should also get the capabilities of the client concerning terms analysis of taking certain risks. Getting to capture the fears and dreams of the client is of fundamental importance. Robo-advisors are growing and becoming more and more popular in the financial industry at a very alarming rate. These non-human advisors have surpassed over $200 billion in assets under management. This is according to statistics collected last year by Gallup. The Robo-advisors are offering the services at a reduced price rate compared to humans.
The Nobel Prize winner insisted that human beings remain at the upper hand for financial negotiations. He emphasized that despite the technological disruption in the market, humans still act as investors and therapists. Nobel Laureate Kahneman is known for his great works. He is much experienced in behavioral economics. While attending a conference meeting at the Morning Star Investment in Chicago, he said that humans will always be there when a client’s plans don’t go as expected. Human advisors make the clients feel a sense that there is someone ready to hear and share their needs with. Clients need a person to trust, a person who will have their interests in mind, and who knows what they want.
Recent years have seen the industry disrupted with technological advancements. This has seen many people lose their jobs as well as decrease the fees for the advisors. The rise of Robo-advisors has caused mixed reactions in the industry. The robots offer financial advice to investors without any form of human interaction. Nevertheless, many financial dealers prefer them because they are cheaper to manage as compared to humans.
Kahneman won the Nobel Prize in the year 2002. He insists that all wealth management firms should quit using Robo-advisors and embrace real advisors who have a human interaction ability. The economist said that he is currently researching on unsystematic errors. These are the financial mistakes that are made by an individual or a group. During his career, the economist carried out several studies on the systematic errors that individuals make. In the recent years, he realized that there is something more significant than just the systematic errors. He recognized that the unsystematic error was the thing that he was missing.