Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Dan's new book for millennials, Wealthier: The Investing Field Guide for Millennials, will be published in April 2024 and available on Amazon.
There’s interest and passion about how AI will impact financial advisors. I experienced both when I posted my views on LinkedIn recently. My post generated over 50,000 views.
A dominant theme for those who don’t feel threatened by AI is that clients will always need “the human touch.” As stated by one advisor: “None of my clients dream about using a sentient robot.”
I’m not so sure.
While the ability of humans to demonstrate empathy is invaluable, few appreciate the impact of “artificial empathy,” which is incorporated into AI and is likely to become more sophisticated.
Here’s why you should care about artificial empathy.
What is artificial empathy?
Artificial empathy refers to AI systems' capacity to interpret and respond to human emotions seemingly empathetically. This technology, driven by algorithms and data analysis, allows AI to emulate the expressions of empathy, though it lacks the depth of genuine human understanding.
Current applications
Artificial empathy isn’t just a theory. Here’s how it’s currently being used:
Wealthier:
A Field Guide to Financial Freedom
Why have so many financial advisors agreed to review an advance copy of Wealthier: A Field Guide to Financial Freedom? It empowers millennials to be responsible DIY investors and financial planners. You can see some of their reviews here.
Wealthier will be published in April 2024.
Here’s what one advisor said: "Saplings grow into trees. We need to help the next generation of investors get to where they need our services."
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To review Wealthier send an e-mail to: [email protected]
Robotic pets: Robotic pets respond to human interaction, offering companionship without the demands of real pets.
Therapy and mental health: AI-driven chatbots provide basic therapeutic support, guiding conversations empathetically.
Medical advice: In telemedicine, AI systems offer empathetic medical advice and analyze patient data and symptoms.
Human engagement with AI
Studies reveal an increasing acceptance of AI with artificial empathy.
One study examined user experience with a popular companion chatbot. It found the chatbot provided a “level of companionship that can help curtail loneliness, provide a ‘safe space’ in which users can discuss any topic without the fear of judgment or retaliation, increase positive affect through uplifting and nurturing messages, and provide helpful information/advice when normal sources of informational support are not available.”
Another study found that the relationship between people and a robotic dog was similar to that with a natural dog. Elderly people regarded the robot dog “much like a family member” and attributed animal features to it.
A recent study found that humans have empathy towards robots and respond positively to robots with empathetic abilities.
A study on the impact of a therapy chatbot found increases in emotional connections between the bot and the patient after only eight days of app use.
Would the interaction between a financial bot with artificial empathy and a client differ?
The future of artificial empathy
As machine learning and natural language processing evolve, artificial empathy is set to become more sophisticated. AI systems will likely offer more nuanced responses and better interpret human emotions, making interactions increasingly realistic while still not rising to genuine human empathy.
Here’s one prediction: “...Generative AI systems could be designed to learn from human empathy and compassion. These systems could be trained on large datasets of human interactions to learn how to respond empathetically. This doesn’t mean they would ‘feel’ emotions as humans do, but they could mimic empathetic responses.”
The human touch
I’m not suggesting you can be replaced by a robot advisor any time soon, if ever.
You have an irreplaceable ability to navigate complex emotional landscapes with genuine care and understanding. Despite its advancements, AI can’t replicate the depth and authenticity of human empathy.
Still, there is cause for concern.
It will become increasingly difficult to distinguish between artificial empathy and genuine empathy.
Combined with the ability of AI to replicate – and perhaps even improve on – many of the services you provide (like portfolio management, rebalancing, tax-efficient investing, asset location, tax loss harvesting, and financial planning), artificial empathy will make AI a formidable competitor.
Dan coaches evidence-based financial advisors on how to convert more prospects into clients. His digital marketing firm is a leading provider of SEO, website design, branding, content marketing, and video production services to financial advisors worldwide.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Here’s what one advisor said: "Saplings grow into trees. We need to help the next generation of investors get to where they need our services."