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IBM and Banking? Should Financial Advisers and Wealth Managers Worry about Competition?

Jan 28 2014, 6:32pm CST | by

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IBM and Banking? Should Financial Advisers and Wealth Managers Worry about Compe

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IBM and Banking? Should Financial Advisers and Wealth Managers Worry about Competition?

You walk into your local bank and expect to talk to a banker about some questions you have about your investments. To your surprise the banker is nowhere to be found. In his place is a large flat panel TV displaying the message “Have financial questions? Ask me.” And so your conversation begins with the most sophisticated computer in the world.

This is IBM’s dream of the future.

DBS Group Holdings, a Singapore-based bank, is testing the use of IBM’s Watson technology in their banks. Big Blue showcased Watson on Jeopardy! when the non-human contestant bested its human counterparts. In the not so distant future, the famous Watson technology may be appearing at a bank near you. Watson will be able to answer bank customer questions in conversational language and “learn” from their responses. In other words it will be able to interact with humans on a completely different level, it will make Apple’s Siri look like MS-DOS.

With far out ideas such as this, some wonder whether IBM is getting desperate to open a new marketplace for their products after six consecutive quarters of falling revenue. While IBM has been selling off parts of its legacy business the company is placing a bullish bet on this new technology unit with an initial investment of $1 billion and a staff of 2,000 people.

When financial advisors and wealth managers get wind of their new competition they may fear their career may be in “jeopardy.” Should they be worried? Could Watson be the initial spark to commoditize the wealth and investment advisor industry? To turn a traditionally human interaction and personal experience into a mere computer transaction? I don’t think so.

Even the most sophisticated artificial intelligence can’t replace the genuine emotion, sincere sympathy, and earned experience (all critical ingredients to the planning process) found with a human advisor. After all, answering trivia questions on Jeopardy! is child’s play compared to the value that the brightest advisors can bring to your financial life.

Disclosure: Rob Russell offers advisory services through Centum Capital Advisors LLC an independent RIA

At the time of this writing the author, his family, and his clients owned positions in IBM.

Source: Forbes


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