More evidence today of the valuable 'disciplined behaviour' role of financial advisers.
Picture it. This morning... and I want to be slow and measured, because precision matters. The scene - a man, alone, 7am eastern-time, on a website he owns, possibly on the toilet, typing some words. Just words. All upper-case. No time to hit the caps lock button. He is a busy man. He is an important man. He types away. Some words are even spelled correctly. Milliseconds later markets convulse.
Money is lost; money is won. Scepticism lingers at the impeccable timing of certain placed oil futures contracts. But that's a side story.
Gold rebounds, oil plummets, the US dollar vacillates. Fascinating stuff in fascinating times, but it's all unfortunately short-term noise. Noise (albeit louder from those upper-case key bashings) that advisers jump into action mode in a bid to protect client ears from damage.
And rightly so. Advisers are the sound boards of sanity. The best financial advisers of the next decade will not be defined by their investment knowledge. They won't be defined by their technical expertise, their access to investments, or their ability to construct a tax-efficient portfolio structure. Those things will matter - but they will increasingly be table stakes, commoditised and augmented by technology faster than most of the industry is ready to admit.
The advisers who will truly matter and who will be genuinely irreplaceable, will be the ones who are brilliant at one specific thing. Understanding human behaviour and protecting clients from themselves.
We are in the middle of a genuine technological revolution in financial services. AI is already being used to screen portfolios, model scenarios, generate research, automate compliance, and personalise client communications at scale.
In the not-too-distant future, the construction and rebalancing of an investment portfolio will be something an algorithm does better, faster, and more cheaply than a human adviser ever could.
That is not a threat to the profession. It is, if anything, a liberation - freeing advisers from the tasks that were always more mechanical than meaningful.
But AI cannot sit across from a client who has just watched their portfolio drop 10% in one hour, who hasn't slept properly in a fortnight, and who is absolutely convinced - viscerally, emotionally convinced - that they need to sell everything today. It cannot read the body language. It cannot hear the fear in the voice.
That moment and intervention is where the value of advice is created or destroyed. And it is entirely, irreducibly human.
Daniel Kahneman - Nobel laureate, and one of the most important thinkers on human decision-making over the last half century - spent his career demonstrating that humans are not the rational economic actors classical finance assumed them to be.
His framework of System 1 and System 2 thinking is essential reading for any adviser. System 1 is fast, instinctive, emotional. System 2 is slow, deliberate, rational. Under stress - financial stress, in particular - System 1 hijacks the decision-making process almost completely.
People don't think their way through a market crash. They feel their way through it. And those feelings are extraordinarily poor investment advisers.
Shlomo Benartzi and Richard Thaler's work on myopic loss aversion showed that investors feel the pain of losses approximately twice as intensely as they feel the pleasure of equivalent gains. Which means that in a falling market, the psychological pressure to act - to stop the pain - is not rational.
It is overwhelming. It overrides long-term planning, diversification strategy, and every sensible decision the client made when markets were calm.
Paul Slovic's research on what he called the affect heuristic showed that when people are in a negative emotional state, they systematically overestimate risk and underestimate potential reward. They see danger everywhere. They catastrophise. And they make decisions - permanent, irredeemable, portfolio-altering decisions - based on a temporary emotional state that will pass.
The capacity to delay gratification, to resist the impulse for immediate relief, is one of the strongest predictors of long-term outcomes across almost every domain studied. In financial terms: the ability to not sell in a panic, to not chase the hot theme, to not abandon a strategy because it's temporarily uncomfortable - that capacity is extraordinarily difficult to sustain alone.
This is precisely where the adviser of the future earns their fee. Not by picking funds. Not by optimising tax. Not by building a more elegant trust structure. But by being the consistent, trusted, authoritative voice that stands between the client and their worst impulses at the moments that matter most.
There's a concept in behavioural finance called the behaviour gap - popularised by Carl Richards - which describes the difference between investment returns and investor returns. Funds often perform well. Investors in those same funds frequently don't - because they buy late, sell early, and repeat the cycle driven entirely by emotion. The behaviour gap is real, it is persistent, and it is expensive. Estimates suggest it costs the average investor somewhere between one and three percent per year in foregone returns. Compounded over a lifetime of investing, that is an enormous number.
The adviser who closes that gap - who keeps their client invested, disciplined, and focused on the long term through every cycle of fear and euphoria - is delivering something that no robo-adviser, no AI model, no algorithm will ever replicate.
So, when we talk about the future of advice, let's be honest about what we're really describing. We're describing a profession that is evolving from transaction to relationship and from technical competence to emotional intelligence.
The best advice firms of the future will invest in understanding their clients' behavioural profiles as deeply as they understand their financial ones. They will use technology to handle everything that technology can handle well. And they will deploy their human capital - their time, judgment, and trust - where it matters most. At the intersection of money and emotion, where the real decisions are made.
The future of advice is not AI it is social and it is truthful.