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Technology is a familiar foe to the profession of financial advice.

Let’s take a quick look at the history of this long-standing rivalry:

The value of an advisor (or stockbroker) in the 1970’s and 1980’s consisted of providing access to two things: markets and information. The proliferation of technology disrupted both within a matter of two decades.

Fast forward to this century where the emergence of robo-advice coupled with the acceptance that consistently beating the market is largely a pipe dream has diluted investment management and birthed the “Comprehensive Financial Planning” and “Wealth Management” movements. 

In other words, “Investments are important, but since we probably can’t outperform an index fund, we can also help with cash flow, tax planning, insurance protection, estate planning, withdrawal strategies, etc.”

And, now, Charles Schwab, Fidelity and Bank of America have announced their plans to offer financial planning software to the masses for free. And, it’s only reasonable to assume that others are making plans to follow suit.

Basically, once per decade we see technology on our heels and decide the answer is to run faster. To pivot our value to the acquisition of more and more technical knowledge and information. 

That’s like trying to run away from Usain Bolt or swim away from Michael Phelps. Even if you start with a lead, you’re always going to get caught.

Here’s the stark reality about the value and future of our profession: constructing a financial plan and building a portfolio will soon be available at a lower cost, in less time, and with less mistakes than working with a financial advisor. 

Not surprisingly, in a Natixis study released this year, advisors revealed their expectation (and fear) that technology will be the main form of competition within five years.

  • Today, they identified the main form of competition as fellow advisors at 62%.
  • In 5 years, 80% of advisors expect technology to be their main form of competition.

As of today, we’re worried about losing clients to the person down the street. By the time we have a new president, a computer will be posing the greatest threat to your bottom line.

It’s as though we heard footsteps, looked behind us, and finally realized that it was Usain Bolt on our heels. And when you can’t simply run faster – or accumulate more technical knowledge – you’re left with two important questions:

  1. Where does the value and future of advice shift from here?
  2. What can we do to extinguish this threat by forever insulating our value from this familiar foe?

To answer these questions, let’s examine another long-standing rivalry between humans and technology. And the ironic realization that we might be better off as friends than foes. As they say:  “If you can’t beat ‘em, join ‘em.”


What Cyborg Chess Can Teach Us About Embracing Technology

In 1997, world-renown chess expert Garry Kasparov suffered a defeat that reverberated through the chess world. It wasn’t the fact that he lost. It was who he lost to.

His opponent was IBM supercomputer Deep Blue.

There is a saying that “chess is 99% tactics.” Tactics are short combinations of moves that players use to get an immediate advantage on the board. 

And, prior to computers, the best chess players were the best tacticians. Those who honed their tactical skills through years and years of practice and repetition. But computers were tactically flawless.

Here’s Garry’s reflection of that moment years later: “Anything we can do, and we know how to do it, machines will do it better.”

Yet, Garry Kasparov used this defeat to spark an evolution that forever changed the chess world. An evolution that started by understanding Moravec’s paradox: Machines and humans frequently have opposite strengths and weaknesses.

The introduction of the computer immediately neutralized any tactical advantage, but tactics are just the zoomed-in individual battles. To win not just battles but the war required zooming out to see bigger-picture and plan several steps ahead. A skill computers simply didn’t possess.

Kasparov began to ponder what would happen if he could combine the computer’s tactical prowess with human big-picture, strategic thinking?

In 1998, he organized a tournament in which each human player paired with a computer. The machine would handle tactics while the human focused on strategy. The machine zoomed in while the humans zoomed out.

As an example from that tournament, Kasparov faced an opponent who he recently dominated four games to zero only a month earlier. The best he could muster was a 3-3 draw only a few days later. And while this tournament immediately leveled the playing field, it was the next tournament that ripped up the playing field and built a brand new one. 

It was another tournament pairing humans and computers. Only this time, the winning team contained neither the best chess supercomputer in the world nor any of the world’s chess grandmasters.

The winning team was comprised of two amateur players with three normal computers. These human/computer combo teams became known as “centaurs”. And they were dominating the best chess supercomputer and teams of grandmasters on their way to playing “the highest level of chess ever seen.”

It wasn’t being played by a supercomputer. 

It wasn’t being played by the best chess players in the world.

How could a team of amateurs armed with normal computers play chess at a higher level than chess supercomputers paired with chess grandmasters?

When posed this question, the captain of a centaur team attributed their success to “an integrated set of skills that in some cases have nothing to do with playing chess.”

Kasparov explained it by concluding that the humans on the winning teams were the best at “coaching” multiple computers on what to examine, and then synthesizing that information into an overall strategy.

In his book, Range, David Epstein summarizes it like this: 

“In the end, Kasparov did figure out a way to beat the computer: by outsourcing tactics, the part of the human expertise most easily replaced, the part that he and (other) prodigies had spent years honing.”

What was once a bitter foe to the chess world became a friend and an integral component of playing chess at the highest level anyone had ever seen.

“If you can’t beat ‘em, join ‘em.”

We can draw three crucial insights from the chess world to apply to the future of our profession.

Tactical Advantage Nullified By Computers

Much like how the best chess players in the world spent years honing this skill set only to be neutralized by the tactical abilities of a computer, the profession of financial advice is nearing the crossroads where a computer will soon nullify any tactical advantage you have left. 

Tactical decisions in financial advice would be how much to save, how much you can spend, how much insurance you need, how to reduce your taxes, how to invest your money, etc. In other words, they are the zoomed-in moves you can make – or the levers you can pull – to accomplish your goals.

And we’ve spent years staking and fortifying our value on the tactical decisions we help clients make based on our technical knowledge, which makes it even more difficult to recognize that this is the element of human expertise most easily replicated, and ultimately, replaced.

Take Gary, a 60-year old man who just decided he’s ready to retire in 3 years and wants a roadmap to get there.

A computer can gather all the financial data, input it into a projection, run an analysis, formulate recommendations and deliver a complete financial plan outlining exactly what to do to make that happen. And they’ll soon be able to do it faster, cheaper and more reliably. It’s tactically flawless.

A computer can gather all the financial data, input it into a projection, run an analysis, formulate recommendations and deliver a complete financial plan outlining exactly what to do to make that happen. And they’ll soon be able to do it faster, cheaper and more reliably. It’s tactically flawless.

Gary can get that plan for free simply by opening up his computer or he can get the same plan from an advisor down the street. That’s why the value of advice is no longer the ability to construct a financial plan and portfolio. And that’s why advisors expect technology to be the main source of competition in five years.

Increased Advantage For The Human Element

The best chess strategy has always been and will always be the one that does two things:

  1. Makes the best tactical decisions
  2. Makes the best overall strategy decisions

The ability to manage individual battles while focusing on winning the war. As we’ve all heard, you don’t want to win the battle at the expense of losing the war. At the same time, you can’t win the war without winning battles along the way.

Technology may have nullified the value in tactical decisions but it amplified the value of big-picture strategic decisions.

And since the big-picture strategy decisions were the role of the humans, Kasparov observed that “human creativity was even more paramount under these conditions.” The only remaining way to gain an edge fell on the human element.

Computers excel at zooming in on tactical decisions. Humans excel at zooming out and incorporating the overall strategy.

The same can be said for the world of financial advice. The emergence of technology is eliminating the need for advisors and planners to focus on tactical decisions, and instead, shifting the value to the ability to incorporate big-picture strategy. A realm of the relationship called the human side of advice.

The explanation is simple. Computers making tactical money decisions only see numbers, dollar signs and time horizons. But even the easiest tactical decisions become flawed when you move from the spreadsheet to the kitchen table. 

Computers making tactical money decisions only see numbers, dollar signs and time horizons. But even the easiest tactical decisions become flawed when you move from the spreadsheet to the kitchen table. 

Think about two parents at odds over the decision to fund their child’s college education. The tactical/technical decisions are relatively straightforward based on the amount of money needed, time horizon, investment strategy, and optimal account selection.

When zoomed in, a computer is incapable of understanding each person’s values and emotions around money. So, how could it possibly incorporate that the husband wants to retire early because his dad’s inability to retire robbed him of precious time with their family.

Every dollar that flowed into the college fund subtracted from the amount of time he would get with his family. And no spreadsheet can model that.

It’s incapable of guiding them through a process of vividly describing and detailing their vision of why money is important to them to learn that the wife wants to be able to provide a fully-funded college education for their children. And, of course she does. That’s what her parents did for her.

The computer cares solely about dollars. It optimizes for a spreadsheet. But, without the human side of advice allowing them to zoom-out and see the big picture, that child would have a fully funded education and an unfulfilled father.

Now, let’s take a deeper look into the element most vital to success.

The Skill Set That Makes The Biggest Difference

Imagine if I told you that when armed with a computer, your neighbor would actually be a better financial advisor than you. It seems next to impossible, but it’s exactly what happened in the chess world. The “centaurs”, amateurs armed with computers, beat the best chess players in the world armed with computers and were playing chess at the highest level ever seen.

Explaining what seemed impossible is actually simple. Prior to 1997, to be the best chess player in the world meant being the best tactician. So, naturally, chess players spent time developing and honing their tactical skills through repetition. Once the value of the human shifted from tactics to big-picture strategy, the ingrained skill set of making tactical decisions was rendered useless.

All of the sudden, as Kasparov explained, the best chess players in the world were the best at “coaching” multiple computers on what to examine, and then synthesizing that information into an overall strategy. A set of skills that had nothing to do with playing chess.

The skill set to make zoomed-in tactical decisions looks nothing like the skill set to zoom out and incorporate piles of information into a big-picture strategy. 

It’s the equivalent of Michael Jordan’s transition from the best basketball player in the world to an underachieving team owner. Athleticism, height, and shooting prowess don’t help you manage people, identify talent and run a company. 

Telling a husband and wife how to fund a child’s education requires an understanding of math and a calculator. Exploring the fear and motivation each experiences as they look at the numbers requires an understanding of human beings.

Telling a husband and wife how to fund a child’s education requires an understanding of math and a calculator. Exploring the fear and motivation each experiences as they look at the numbers requires an understanding of human beings.

And understanding human beings and mastering the human side of advice requires integrating a skill set completely unrelated to finance and foreign to the profession.

It’s a set of skills that generally has nothing to do with financial planning, investments, risk management, taxes, etc. It’s the ability to guide clients through the process while unearthing their values and emotions around money and changing their behavior for the better. A skill set rooted in behavior, psychology, and communication. A skill set focused on the human side of advice and the human side of the relationship.

No technology can replicate the ability to sit down with a client, build trust and connection, and guide their behavior for the better, which is why the advisors and planners who master the human side of advice stand to be the ones delivering financial advice at the highest level ever seen.


After his defeat at the hands of IBM Supercomputer Deep Blue in 1997, all Kasparov set out to do was get revenge by beating the computer.

Little did he know that within a matter of years he would watch chess being played at a level he’d ever seen or imagined. The likes of which would have been impossible without embracing this rival and its strength of tactical perfection.

I hope the parallels between chess and financial advice have already started connecting in your mind. 

But, there’s one crucial difference that gives us an advantage. It took an embarrassing defeat to spark change for Kasparov and the chess community. They suffered the defeat, and fortunately, handed us the playbook on how to handle technological advancement and raise the level of financial advice to the highest level we’ve ever seen.

Technology is on our heels and has momentum. We have two doors we could walk through:

  1. Continue trying to “outrun” technology by striving for more and more technical knowledge only to eventually get chased down
  2. Embrace technology by outsourcing the areas of human expertise that are most easily replicated (technical knowledge) and focusing on the human side of money.

As a profession, we’ve opted for Door #1 time and time again. A temporary solution to a problem that won’t go away. No matter how many times we try to knock out technology, it bounces back with a vengeance.

As Garry Kasparov knows, behind Door #2 lies the highest level of advice that we’ve ever seen and the insulation of our value from any further technological threat. 

If you can’t beat ‘em, join em.