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The Technological Revolution Isn't Coming to Asset Management - It's Already Here

by Peter Hans
on February 13, 2017

The Technological Revolution Isn't Coming to Asset Management - It's Already Here

The asset management industry sits at a fascinating technological crossroads. On one hand, you have a business culture rooted in relationship based success – it’s a people business. But with that comes inefficiencies, and while those inefficiencies have always been somewhat manageable, that has rapidly changed.

The greatest competitive advantage of humans is our ability to leverage technology.

The good news is, it’s mostly good news. While new innovations certainly exist to kill the human side of the business, most innovations are designed to enhance human performance across investment management.

Humans have one significant advantage over “disruptions” designed to displace the advisor – we’re human, and this isn’t Terminator 2. These new innovations shouldn’t be run from, and they certainly shouldn’t be ignored, they should be controlled by an asset manager’s IR or marketing team.

The innovation set to target and kill human inefficiencies can be turned into an asset for managers to offer more value to more clients, and at a lower cost. Human advantage over other species is our ability to create and leverage technology, and our advantage over technology is our ability to be human.  

Technological innovation isn’t just coming, it’s here, it’s software and no one seems to know whether it’s friend or foe, life or death. No-one is worried about the “friendly software.” But what about the Robo Advisors, the marketplaces and smart beta products?

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While these technologies can be quite smart they do not possess our ability to balance computational processing with emotional intelligence and behavioral psychology. Artificial intelligence is very good at some things, but it’s not very good at acting human.

From the wheel to AI, our ability to scale technology and create new baselines of efficiency is what has made humans the world’s most dangerous predator. Technology, since the dawn of man, has put us atop the food chain. But while the whole ‘alpha predator’ thing is pretty cool; we have also created many of examples of technology that have destroyed us (both literally and figuratively).

Historically, advancements in technology typically came in the form of hardware, where it is much easier to determine if an innovation is friend or foe: here’s a television/here’s a gun, here’s a machine that helps a factory worker increase efficiency/here’s a machine that makes a factory worker obsolete. Over the past 25 years these advancements are increasingly in the form of software, where intentions are far more difficult to discern. Fear is magnified when one can’t differentiate their friends from their foes.


Don’t fear technology, even the technology that’s here to destroy you. Embrace it, own it – because it’s not going away and you can control it.