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Will Your Next Financial Advisor be a Cyborg?

Will Your Next Financial Advisor be a Cyborg?

To keep the CFA program current and relevant, CFA Institute continuously interviews investment management practitioners, employers and regulators through its practice analysis. One of the trends identified recently is the impact such FinTech advances as big data, robo-advice, and blockchain will have on the industry. Like many practitioners, I like to stay current with emerging trends, and will occasionally collect some of the resources I find interesting into posts like this one. Opinions expressed are mine, not those of CFA Institute. Whether you find them useful or can suggest improvement, please let me know (both so I can learn more and so I can make these posts more useful to others.)


Automated programs such as Betterment and Wealthfront have recently commoditized asset allocation, providing access to diversified ETF portfolios at a very low cost. They may even be encroaching on advice, according to Randy Cass, CFA: “In two years, I will bet you, you will think you’re being managed by an individual and have no clue that the messages, emails, prompts, and alerts you’re getting — because they’re so personalized and customized — are actually being generated by a system.”

How do we mere mortals compete? According to Meir Statman, it is by exploiting our competitive advantage of being human. “You do what no robo‑adviser does: You ask, you talk with your clients, you listen to them, truly listen,” Statman told the audience. “You empathize, you diagnose, you educate, you treat, and all over again, because they will forget what you have done for them.” Michael Kitces seems to agree. In an interview with Wealth Management Today he said "we didn’t know how bad our user experience was because we only compared ourselves to each other and everyone sucked equally.  The benefit that the robo firms provided to the industry was that they pointed out how bad everyone’s user experience was!"

Big Data

Perhaps the future will belong to cyborgs. "The future isn’t artificial intelligence eliminating human analysis; it’s artificial intelligence augmenting human analysis.... Technologies like Prattle aren’t going to make human analysis a thing of the past—they’re going to make human analysis better than ever. Analysts who could once only cover 15 stocks will be now be able to cover 150. Analysts who would once spend hours tediously sifting through documents will now be able to immediately identify what merits their attention."

Mark C. Hoogendijk, CFA says visualization is the key to finding meaning in the data, and that "those interested can spend one or two days doing a data-visualization course."


Best known as the technology behind Bitcoin, blockchain has many potential uses for transparent accounting and contract enforcement. Those new to blockchain may want to begin with this interview with CFA Institute's Larry Cao, in which Jennifer Qin outlines the basic purposes (and challenges facing) blockchain technology.  Or read The Financial Brand's "What is Blockchain? And Why Should I Care?"

Right now, it seems much of the action lies in creating distributed applications, or dApps. According to Fred Ehrsam, however, the necessary infrastructure is only about 70% built.

So... What else should I be reading?

Photo by Amber Case

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