AdviceTech Podcast #26 – Oxford Risk – Transcript

Peita Diamantidis
Hello, and welcome to the ensemble advice tech Podcast. I’m Peita Diamantidis and the guest joining me here today to deep dive into Oxford risk include someone who started her working career in the Australian financial services world, however, went all the way over to the UK, including a stint working in the London fire brigade Would you believe she then provided advice to high net worth clients in the UK before shifting into the FinTech space. Our other guests will be the first PhD from Cambridge we’ve had on the show very exciting, and runs behavioral wine tasting workshops that I think could transform the take up of behavioral finance by financial advisors in Australia. Thank you so much for joining me on the show. Bianca Keynesian Greg Davies. Welcome, GM. Thank you. I’m really keen actually about this. I’ve done some digging into Oxford risk. I can’t wait to dive into the detail. But before we do, well, Alice is no we interrogate you a little upfront on your own use of technology. So Bianca, what is your most used emoji? Do you even use emojis?

Bianca Kent
I do I do. I’ve that age bracket where I do use them. And I still don’t care if the young people don’t think they’re cool. So probably it’s the it’s the cheeky one where it sticks his tongue out.

Peita Diamantidis
I like it. See, that’s got a little bit of personality. We love it. How about Greg, how about you? Do you have one that you regularly use?

Dr. Greg Davies
I do. I don’t know what is called us one that sort of the grimacing face with it with the teeth bared.

Peita Diamantidis
I think that’s the first time we’ve had that one. I wonder if that’s a cultural thing we should do some sort of survey shouldn’t wait from from different sides of the ocean and which one is the most popular? I do know that. There’s been studies would you believe that generationally, the thumbs up, which is actually a very popular one over here, is considered by the younger generations as a passive aggressive sign from my degrees. I thought ridiculous words you believe? Well, but but how interesting, right? The words and the images we use. We all interpret them so differently, I would just find that so fascinating. So then Greg, if you I’m assuming you like the rest of us, you know, live attached to a smartphone. If you had to wipe everything off at all the apps gone and you just got to keep keep three, which three would you keep?

Dr. Greg Davies
Definitely Spotify on the music nights. I love to walk everywhere with noise cancelling headphones and listen to music. So that would be one probably a podcast app for similar reasons. And then I think I also use it quite a lot for the fitness tracking stuff. So it’s been track off. Okay, that’s how much I’m moving. Those will be the three

Peita Diamantidis
because I believe you’re chair of a charity about music, aren’t you in the UK. So you’ve got a bit of a leaning towards such things.

Dr. Greg Davies
That’s why I guess the UK is a national organization for new music and composition. So all very experimental cutting edge stuff.

Peita Diamantidis
Fantastic. Well, and that’s an interesting combination for me, because my backgrounds in Actuarial Studies and so people often think maths is just dry and corners, whereas in fact, music has a beautiful mathematical element to it. So I love it. Bianca, how about you, if we if we whip that phone away from your wiped everything off, what will be the three that you’d have to have back?

Bianca Kent
So I think Sunday enough a bit like Greg, I’d need my health app because I’m an Apple Watch nut. So I’m always watching what I’m doing, how I’m sleeping, how my fitness is going. So that’s one of them. I’d have to keep Instagram because I keep dreaming of big house one day and what I want to do with it. So I like that, you know, inspiration around how I decorate a home one day. And the third one is totally vain. But it’s an app that allows me to add makeup to my photos afterwards. So if I’ve had, you know, been a bit lazy and gone out without it, and I’ve want to add some later on afterwards. It’s really good.

Peita Diamantidis
Oh, that’s fantastic. I love the tools are so clever this day. Well, I mean, what do we what would we do without them? Although now that you mentioned the Apple Watch, sort of laughing thinking that what would we would we even use Apple Watches if we only had three apps? Like would that make them something that was less interesting? If you only had three things on them? I wonder if anybody could use maybe they just become a watch that go back to their original intention? I wonder? All right, so let’s dive into Oxford risk. For the listeners. This is something that’s new to me as well. So I’m really excited to dig into the tools that you guys have developed and and sort of this area of behavioral finance that to be quite frank is new to a lot of us. It’s something that we may have an instinct of in talking to lots of clients, but certainly not as across the sciences we could be so I guess, you know, Greg, we might start with you. If you can help me get a sense. Let’s lift up and talk through where you guys fit in the whole FinTech, you know, helping advisors, but it’s, you know, what category do you fall under? Who are you sort of generally lined up against?

Dr. Greg Davies
Or? It’s a difficult question, because I think, broadly speaking, that two sets of things we do. The one is, is? Well, it’s it’s a three things. So the one is understanding clients more deeply. So yes, you psychometric profiling tools, we build fact finds, it’s all about understanding who you are, what you’ve got, where you’re going. And, and so that that would be the first thing. On its own, though, understanding clients doesn’t really get you very much, you have to do something with it. And so that the two things that we deliver after one is suitability. So based on all the information I have on you, what is the right answer for your risk level for your asset allocation, etc? So trying to match you to the thing that’s right for you. And in a very data evidence based way? Yeah. And then the other thing is, is about guiding because, unfortunately, telling someone what the right answer is, is almost never enough for them to actually enact it, and stick with it. So this is where a lot more of the behavioral science comes in. It is about making people more emotionally comfortable with the right answer and the journey towards it. And the journey once you’ve got it. So keeping people emotionally comfortable through all the ups and downs of the investment cycle. Yeah,

Peita Diamantidis
it’s that final piece is so important is it I’ll often look at pundants on anything it can be. It can be soccer, it can be a finance, it doesn’t matter what it is. And you’ll hear somebody that’s been around a long time saying, Yeah, I’ve been saying that for years and nobody’s listening. And I instantly processes well, you’re saying it the wrong way, then, like, if no one’s listening all along? Where’s the story? How can we engage, you know, and so that journey is so important, because none of us learn by being yelled at with facts. You know, there’s, there’s the journey element of that is so important.

Dr. Greg Davies
No, and arguably, that’s what most of the financial services industry has done for the last 50 years is to go, yeah, we’ve crunched the numbers, we’ve built the portfolio, we’ve drawn an efficient frontier or whatever there is, and therefore, here’s the thing that you should do. It’s against that, that you actually nobody buys a risk return trade off, you know, people buy stories, they buy narratives, so you have to give them the story, you have to give them the comfort.

Peita Diamantidis
And interestingly, you know, they’re gonna buy the story, whether it’s good for them or not, you know, and I think the public’s reaction to things like cryptocurrencies, a great example, we’ve had late 70 year old clients come to us after, you know, after having done a few things that weren’t particularly the right path, and they’ve leapt onto this bandwagon, you know, and it’s stunning, you know, that’s so interesting, because that’s, that’s the motion, that’s FOMO that’s always things that have driven somebody to act in a way that you and I would probably argue, isn’t how they are actually, it’s not, they wouldn’t necessarily assess themselves as high risk or, or, you know, willing to take a punt, you know, but here they are behaving emotionally, you know, so, yeah, it’s really important.

Dr. Greg Davies
You know, almost every deviation that we as humans do from good financial decision making behavior, is because we’ve been tempted by a shiny story somewhere. And, you know, people people don’t like diversification because it means they have to hold on really small bits of lots of things that they’ve never heard of. What we like is buying large chunks of things that we have heard of, and so you know, People will exchange a good portfolio of diversified portfolio of good investments for a concentrated portfolio of good stories, which is a very different.

Peita Diamantidis
Yeah. And it’s interesting, I’ve never really thought that through. But also, you know, if we’re not combating the average or the misleading stories with appropriate stories, then what else are they going to consume? Of course, they’re going to, they’re going to buy into that, because they’re not hearing anything else. You know, voids don’t change voids, don’t stay voids for long gets filled, and it can get filled with bad stories, things that are going to mislead, some things are going to take them down the wrong path. And women so yeah, so And look, before we sort of dive into some more specifics banker, I’m curious about your perspective on on, you know, Europe and UK versus Australia, I’m assuming that the messaging or the way we all talk to the public is pretty similar. You know, do you see a bit of any difference in, in this, you know, ability to tell stories better or engage better? Are we all sort of on the same journey of learning how to do this better for the public?

Bianca Kent
I think there are a lot of similarities. You know, the process is very similar. The stories are very similar, I think, in this particular area, the UK is a little bit further forward. So I think, you know, probably, because companies like us have been around for a while. So there’s that extra step into looking at how to do this sort of thing better with clients. Whereas here, I’m thinking there’s a little bit more of, you know, we’ve still got people that are pulling out risk profile descriptions and just sort of describing them as they are you sound like that one, rather than any sort of robust, you know, process in place. I think we’re moving along the same path, but slightly at a different pace.

Peita Diamantidis
Yeah. And it’s an interesting, it’s an interesting comment, because one of the dangers, I think, with numbers and analysis is that the industry but also the public say these is truth, they don’t see it as measuring of something. So when you do something like a risk profile, the the outcome balanced, that’s the truth, right? That’s like, Well, no, it was something that was designed to have a formula that gave an output, you need to understand the rigor of the thing behind all of that, or it could just be an output, it could be actually quite random or meaningless. And so I think, and it’s a problem when we have numbers, because people see those as black and white. Whereas if you’ve been in the game long enough, you know that you can create numbers to show anything, and prove anything. The rigor is so important. And I guess, just taking a look at the content you guys have, I’m guessing that’s a big part of who you are. And what you guys do is that rigor, it’s what’s behind it. It’s what supports these tools.

Bianca Kent
Exactly. And it’s not about just that those descriptions, I was just gonna say it, it’s not just about that, it’s also about how, how that client is going to feel and reacts. And that’s a bit that they don’t necessarily get just from a description or a number.

Peita Diamantidis
Yeah. And, and, you know, categorizing or labeling all of these things can be helpful. They shouldn’t be the only thing. And so I think that’s where factoring in the behavior, and potentially that journey, like you’re talking about, Greg, I think is so important. So then let’s, I guess it’s what sounds like we’ve sort of got these two elements. And let’s start with the I think it’s called investor compass, is that the key tool, the preferred for, you know, Vice practices or wealth management firms? Talk me through, like, what’s the primary problem it was trying to solve? How did it come about such that and develop the way it has, you know, what was it responding to?

Dr. Greg Davies
Well, I can give a little bit of the history there. So Oxford risk for a long time really just did one thing. And it did it this is this is before either of us as children, but it really specialized in in risk profiling, measuring risk Taurus, and it did it with a extreme degree of academic integrity and scientific data measurement, etc. But all it measured was was risk tolerance. And you’ll notice as well as I do that, measuring risk tolerance is important. But it’s only one small component of the whole ecosystem of what is the right answer for this client. So the very first thing that we started building out when when I joined Oxford risk was to say, well, let’s build the rest of that ecosystem that’s build a suitability tools that will identify the right answer for you. And that right answer will be different Yes, depending on your risk tolerance level, but it will also be different depending on every aspect of every every asset and liability on your balance sheet, every future assets and liability, future cash flows. Every one of those things, changes your capacity to take risk with your investable assets now, so we look at we look at them all in the hall. Plus we bring in other things that the regulators require, like tests of knowledge and experience and vulnerability, etc. So that investor compass is really a very holistic view, with lots and lots of moving parts, all brought together in a very consistent way into The algorithm that goes, what is the right answer? What is the right level of risk for you to take with a full digital audit trail of where that answer has come from? And how it will change if your income goes up? If your plans and goals change in if, if anything and your financial circumstances change, that answer will change. So it can turn suitability into something extremely dynamic, and extremely defensible, because it’s looking at the person as a whole, not just their assets and liabilities, but their future time horizons, cash flows, goals, and numerous aspects of their financial personality.

Peita Diamantidis
Okay, so So to give it a bit of analogy, for those who haven’t sort of experienced something like this, and to be honest point, there’s lots of advisors in Australia that wouldn’t have used a tool like that before, then the difference is, you know, what we might be using for a risk profile is sort of like taking a blood pressure, it’s a point in time, and it’s for one single thing, and you get an output. What you guys are talking about here is more like a full body scan that’s quite dynamic. And it’s going to adjust based on what’s going on in all sorts of parts of the body. You know, it’s not just one element is that a valid sort of thing, it’s got a lot more depth and complexity to it. And adjustment than you know, just this one thing in time.

Dr. Greg Davies
A quite a bit, I might steal that analogy.

Peita Diamantidis
Done, I won’t charge you much. It’s alright. So then, okay, so I’m guessing without you having said explicitly that, the other things that are getting factored in with lots of talks about ESG, and other ridiculous acronyms we come up with in our industry, that those are some of the other things that you’re factoring in now that that’s part of the picture of this individual is also what they’re interested in what they value, you know, what they therefore, you know, what lens they want to apply to where they put money. Is that valid?

Bianca Kent
Yes, definitely. So So within that, we’ve gone through, Greg’s gone through sort of the major bits, the behavioral side, some of the things we’d cover are a client’s confidence levels, their composure, I like to call it the freakout meter, are they going to freak out when the markets drop, you’ve got that information, and that sort of giving you that suitable result? And then we’ve got an extra module around ESG. So this is now how you can start talking to your client identify? Are they interested? Are they a bit apprehensive about it? How do they feel about the potential and this is sort of controversial, depending on which advisor you to talk to, as to whether there is a trade off to invest in sustainable investments or not. But is the client willing to make that so that gives you an extra layer? So you’ve come to a sort of level of investment risk that’s suitable for them, then you’re sort of looking at well, do we need to put them in some ESG products or not. So it gives you that extra level around how to look at what you where you should put them.

Peita Diamantidis
And the ESG thing is interesting. I think, you know, originally, when this all first came up, we were really looking at the same category of people who were, you know, sort of standing in front of the coal mine strapping themselves to the, to the machine and stopping things happening, right. So it was that sort of extremist is unfair, but really extreme views or passion about something. Whereas I think where we are at now, and it’s why we need tools like this is I think it’s it’s now about broader awareness, people are really more aware that this is something they want to start thinking about. And they’re not necessarily ready to act, but to help them understand a bit better about how they feel about it, right. So help get them back clarity, and then even just be able to tell them, and this is where your current investments sit, you know, we’re not talking any change here yet, just that awareness, I think is it’s sort of in that category of just sorting a little bit of your rubbish out into recycling bins, like it’s nothing, it doesn’t feel well changing, but it’s part of the process, you know, it’s part of what we will need to go down to better understand these things. So I think it’s really important, we have powerful tools to help draw that out. Because most of the A, most of the public don’t know what ESG is, or what the individual elements of that are. And also, once they start to understand that, I’ve had a lot of people saying, well, of course I care about that. Like, they never realized that they never realized their investments might not have, like, it’s one of those. What do you mean, they’re investing in that? What, and I’m not even talking about necessarily climate or anything like that. It could be gender equality in businesses, or it could be, you know, governance, and you know, like, all these things. Wait a minute, aren’t they filtering for that already? You know, it’s such an interesting realization, I think, for the public that they just thought that was already happening.

Dr. Greg Davies
And we’ve, you know, we’ve done research studies of people’s preferences for ESG across four continents now and we get much the same headline answer regardless of where you look. That about 70 to 80% of people will go Yeah, of course, I want my my wealth to be aligned to my values. You know, I wanted I want to do some good with my wealth. It doesn’t mean that they necessarily, you know, want to walk around in a hair shirt and donate every penny to charity, but equally, they they want to feel comfortable. There are welders doing some good. And I think large swathes of that population just simply haven’t had, as you said, the awareness or the or the ability to access it. So simply making people aware of that first step can then start to bring them on a, on a journey, as well as a journey as you bring them on a journey to, you know, to sort of figuring out what the right fit is for them. And maybe that’s buying us cheap products. Again, you’re right terminology is dreadful around this jargon and terminology. And one, one redeeming feature of ESG is that it’s easy to spell. But the, you know, there might be that or it might be engagement, it might be, you know, doing something a bit a bit more on a bit a bit deeper. But trying to match people to solutions is really where we’re at. Because some people will be more comfortable with it, some people will be less. And the evidence suggests that for the people who really do like ESG, in 2022, when the markets plummeted, and everyone got bad returns, the Morningstar evidence that came out is that the funds in the world that were ESG labeled, the investors investments were much much stickier because people have a reason not to sell that fund. It’s no longer just about returns are there while I’m going to sell something on my portfolio, because I’m scared. Well, the thing I won’t sell is the thing. That’s good. I’ve got an emotional reason to hang on to.

Peita Diamantidis
Interesting. Isn’t that interesting? Because the the emotion is potentially creating the better investor behavior to so things not overreacting, not pulling out? Not not, I’m waving panic, you know, it’s how interesting that it’s, but it’s not a it’s not because of the logical reason for that. It’s an emotional reason. But who cares, right? If it gets the right outcome. That’s a good thing. So that’s, that’s an interesting insight in terms of for advisors about ensuring that our clients are more connected to where their money is invested, because that will make a difference. Because they make they’re not making a choice to get out of that fund. They’re making a choice to get out of that underlying thing. That underlying company or cause or whatever they’ve, you know, they’ve invested in. So yeah, that’s an interesting difference and insight. Wow. Human beings.

Dr. Greg Davies
Back to stories and emotional comfort again.

Peita Diamantidis
Yeah, absolutely. Absolutely. So in terms of then the tools, then with, you know, this comes with compasses, clearly, you know, operates within the advice practice, but the clients interact with it, is that correct? So then they might get sent some questionnaires, something some sort of engagement tool, how does that work? What we throw through that experience from the clients perspective?

Bianca Kent
Absolutely. So investor compass, the main tool is a web tool. So basically, the advisors go in, they have their access, you can give me a pair of pliers, etc. And you’ll go in and set your client up and decide what do I want to send them. So we’ve got the four modules, you might send them all for in one go, you might send them to now and maybe the ESG, one later, when you you know, talked about them a few more things. And they can either fill it out online, so you can email it to them, you can email it directly from the system, print out a PDF, if they’re not technologically advanced, they can fill that out, and then your administrator can pop the questions in later. And then the system will do all the calculations, and you get your result which is on screen. So you can go through and show them images and descriptions of everything. And you can also have a report that you get a client report and an advisor report for compliance that you can keep on their file that goes through everything that all the steps of how we got to the responses, and that and the answer at the end.

Peita Diamantidis
Fantastic. Okay, so there’s an an immediate output of that energy by them, I think that’s something that’s a bit of a flaw with advice is often a process will be, you know, extracting a whole lot of information from them and having to collate and then doing things and then silence for a long period of time as we work. And then suddenly, we we, you know, slap them over the head with a 60 page document full of all sorts of scary things. So, so I liked the idea that there could be quite an immediate report, they could get something that, that for the remediate effort of answering all these questions, they get something insightful. So I think that’s a great win as well,

Bianca Kent
exactly. And that’s what I liked about it. Because I have, again, I agree with you so often, you get no nothing from all that work you’ve done. Whereas here, you can actually start to read about it and think about it. And then potentially, if you’ve if the clients done it before the meeting, they’ve come with questions, and they’re on to talk to you about what they read about themselves. And they’re usually quite engaged go, Oh, I didn’t know I had low composure and what does that mean for me sort of thing.

Peita Diamantidis
So Greg, what’s your view as as? I mean, there’s sort of two approaches to these things currently in the way I see them here. Sorry, not these things. Let’s just talk risk profiling even though this is then this is like 3d, you know, AI version, really every sprinkling but, but there’s two approaches one, you know, you send something to the client cold you let them answer it in their own world and in their own environment without input and then you have a discussion whereas others will walk the client through it in a meeting and have to admit that second one And I’ve always been wary of my own influence on their answers. And so I’m curious what your insight into into that is, and whether we need to make sure you know, what are the behaviors we should have, as the guide in this process so that we get, you know, the actual response from the client.

Dr. Greg Davies
So I agree completely, I think getting the client to ascertain their risk tolerance independently is hugely important. I mean, the advisor, all of us have an influence on on others when we’re working through things with them. But you’ve got an advisor client relationship, this person has come to you precisely because they are not the expert in it. And advisors with the best one in the world are themselves somewhere on a risk tolerance spectrum. And most of them tend to actually be if you take a sample of the advisor population, they will, they will tend to be towards the higher end relative to the broad population. Yep. So there’s always going to be a tendency for the advisors. And this is not to say that they’re doing this intentionally in any way. But of course, they know what they think the right answer is for them. And that will be influencing things. The one thing I would say, though, is that if you’re going to get the client to answer questions themselves to arrive at a risk tolerance, those questions had better be well designed. And we see a lot of tools out there where someone has just snapped a few questions onto a piece of paper that they think are relevant, some random scoring method, and then it comes up. You know, we spent a huge amount of time testing hundreds of different questions on samples of 1000s of individuals. Figuring out, you know, when we score it, how do we how do we know those scores to make because some things people will naturally tend to want to agree with more or less than there are biases and responses, you’ve got to correct for all of those things. And there are some extremely bad ways of eliciting risk tolerance. And most of them are bad for a very simple reason. If I’m measuring your risk tolerance, because I want to build for you a portfolio you will hold for 510 1520 years. What I want to know is what is your willingness to trade off for risk and return in the long run? Right, what we offer if I present with you questions and go, How much risk? Are you prepared to take? You I will get an answer from you. But it is much more likely that that answer will be an answer to the question, how do you feel about taking risk this morning, then your long term willingness to trade off risk in return? It comes with all of the baggage of what’s in the newspapers this morning? What did my friends tell me about their investments over the weekends, etc. And if I build for you a portfolio that you’re gonna hold for 10 years, based on the fact that you happen to read bad news in the newspaper this morning, I’ve already not done my job very well. So it’s very important to make sure that we’re measuring the right thing.

Peita Diamantidis
And conversely, I can imagine, you know, we’ve got our, our complicated, but now long running Retta solutions in Australia now where it’s, you know, we have to put the money into superannuation and all that sort of behavior. And so lots of people view that money is aside for a long time. So therefore, their willingness to take risk is high, just because they don’t really think about it. So it’s sort of like, however, once they living off that money, then suddenly, their reality and the way they react to risk in their portfolio is so different, because they’re very well aware that this is it, this is the money they have, and this is what they need to live off. And so you know, that context, you’re actually right, it’s so important, because their behaviors will be fundamentally different in those environments and all the stages in between? For sure,

Dr. Greg Davies
absolutely. I mean, the attention, we direct to things change changes. The biggest question is, issue rarely is that when we view things in short time, slices, risk feels negative. Yeah, taking money from somewhere safe a savings account and put it in in investments feels like a really negative trade off because I moved from safe to risky. Yeah, actually, if I’m holding these investments for the next 10 or 15 years, the risky thing is leaving in a savings account. So our psychological intuitions in the short term are completely opposite to the reality of what we should be doing in the long term. And that’s why we have to shield ourselves against them.

Peita Diamantidis
Yeah. Has there been and this is just off the cuff. And I probably apologize for putting you on the spot here. But is there any change for example, like, you know, social media in the way we respond to stimuli or information or the speed with which we get it? Are we are you seeing, you know, in the history of the study you’re doing into behavior and what we do? Has that changed based on the way that we’re all interacting with things differently? Now? Is there any any evidence to suggest that people may behave differently because they may react, they’re getting the information faster, even if it’s bad information and reacting faster or anything like that, that you’re seeing?

Dr. Greg Davies
So I don’t think the fundamental aspects of human psychology have shifted yet but because in for emotions so accessible and so fast. The dangers of it are hitting a much wider population more of the time, right. And so, you know, we can go back to South Sea bubble or you know, when you really had to go into the city and hang out outside a coffee house and get into the crowd itself to do this. Whereas now all I have to do is turn on my computer. And I’m bombarded by short term highly granular information. Yeah, so I think it’s not it’s not changed humans, but it certainly has made more humans susceptible to the dangers of the information coming in. Yeah.

Peita Diamantidis
So that then means the framework within which and I guess that’s part of what advisors are building for clients over time is a framework to to engage with or filter, those sort of messaging through, that’s where, you know, there’s, we need to strengthen that, to enable the client to process that sort of information, you know, and understand which parts are completely valid, Curiosity is a good thing. Absolutely ask the question, versus helping them identify noise as an example, you know, this is just noise, they’re trying to get a click, you’re not helping yourself or anybody responding to that?

Dr. Greg Davies
Yeah, I mean, see what a lot of dangers of that and the pandemic, you know, the whole story about Robin Hood, and GameStop, and meme stocks and cryptocurrencies that this is often was a highly vulnerable population, because it was mostly actually, exactly the people that financial services struggle to, to access, which is young people sitting at home at a pandemic, with lots of time on their hands, and, you know, taking pants on falling knives, yep, it potentially very, very dangerous. And, you know, there’s, there are things that we really shouldn’t be trying to encourage people to engage more with their finances, they should be thinking about, you know, not just leaving cash sitting, doing nothing, year after year, etc, thinking about engaging with financial planning, thinking about engaging with the structure of real finances, but we should be encouraging them to disengage with the day by day, ups and downs of the market is going red and green and

Peita Diamantidis
red. Yep. Because that’s just what markets do. This is what they are. So Bianca, in terms of practices that have you know, rolled this, you know, folder this into the experience? Or who do you see that this works really well for? And who do you think are the struggles or, or find, you know, they might play with it a bit, but then then don’t roll it out? You know, where does it? Where does it really land? And is it down to the way they implement it? Which I’m, I’m betting it is, but you know, what, how do they how do they fold this in? Well into a practice.

Bianca Kent
So I think I mean, if we look at Australia, at the moment, we’re still relatively new. So we’ve started to mostly work with some smaller sort of boutique firms who are going who are finding it easy to slot something in because they’ve not got, you know, lots of different processes, and they’re probably a lot slicker with where they are. So we’ve had, we’ve had some good clients that are starting to work with this and that space. Now, if I look wider into a sort of our UK client base, we’ve got everyone using it from sort of one man bands to large nationals, licensees, private banks, retail banks, pretty much everybody does, because we can work it in different ways. And we’ve got the web tool that you can come in use straightaway. But we’ve also got an API suite. So if you’re the type of business that actually likes to build your processes, and link them all together, you can build it in the way that you want as well. And we also do integrations. So that’s another way. So when we work with firms that are either doing the integration themselves, or working with CRMs, that we integrate with that software also helps because you’re saving that double King, you know, bringing all your client information in to make it quicker. And that makes it a lot easier to use. And we’ve started building integrations in Australia, actually, already, we’ve got our first one with intelliflo, who are another new launch out here, and we’re looking at x plan next, hopefully in the next couple of months. And after that we’re going to work on client requests. So which CRM is people are interested in out here.

Peita Diamantidis
I look the integrate. I mean, you know, I love tech, clearly I’m hosting a tech podcast, but but ad integration is one of those, it’s like that green tick, that’s like an automatic interest for me, you know, so if your integrate what who, you know, I really want to understand better, but I do think that it is easy to focus on that almost first before seeing the winds you can get out of the tool anyway. So it’s interesting, isn’t it? It’s I find myself Oh, and integrated. Yeah, yeah. But then actually, you know, I could just, you know, implement something like this in the practice and would see value anyway, even if it was manual, even if we had to, you know, reenter or rekey or any of those sort of things. Those things are solved by members of the team, you can have people that solve that whereas, you know, rolling this out so that it, it can truly impact the clients and their experience. I think, you know, that’s where, you know, that’s where the real gold is going to sit. And I guess to that, to that end, is this something that when people start or practice stats, you know, it’s really just the adviser the client like those are the only users or, or do you find that the rest of the practice in terms of the process or the way they roll it out can get involved? Can they, you know, utilize the tool and take part as well,

Bianca Kent
I think it’s, you know, it’s predominantly the advisor, but it depends on the practice. So we’ve got a lot of companies that rely heavily on paraplanners, to do a lot of that work, preparing the client files, actually doing the reports afterwards. So they get very involved with sending out that the assessments and then looking at what’s happened afterwards, and prepping that information for the advisor, then to have those discussions. So definitely, I think advisor in your Power Plan is a very well into that process,

Dr. Greg Davies
as well. Now there’s another what we started doing actually now for a lot of our sort of medium size and larger clients is also just the the the emergent information that you get out of this, because we have individual personality measures are not multiple dimensions of every one of their clients. So we can start to use that for attitudinal segmentations help people understand their client base much more effectively. And this is where some of the guidance stuff comes. Because imagine you have an incredibly volatile week in the markets. And on Monday morning on your advisors come in, if you’re a reasonable size firm, and they sit down or turn on their screens. And what you want to know is how do I best deploy my time as an advisor to where it’s most useful, because markets are going mad, I want to know, who do I call first with what message. So if I know, I, the system is going to tell me which clients have logged in over the weekend, what their portfolio has done in the in the last week or the last two weeks, which of them have composure scores that are low or impulsivity scores that are high, or confidence scores that will low. So we can look at different segments of that population based on behavioral attributes, and what we’re observing in terms of their interaction with their finances, online, etc. And start to make sure that as advisors, we’re actually empowering advisors to use the really valuable human touch in human interaction they’ve got, but in a much more targeted and, and focused way.

Peita Diamantidis
Interesting and, and as somebody who does lean towards trying to find one too many solutions as well, then, you know, the content, you could be pulling together, if you start to see themes or groups, then you could start to really tailor content to specific behaviors. And that’s, it’s, it’s really engaging, right, I found that I did the Gallup testing, and we did it with the team. And that’s that real DNA of what you’re about, which I love. And, of course, the emails you then get from them are really tailored to your different strengths, you know, and you’re instantly like, Oh, that’s interesting. Well, of course, it’s interesting, they’ve narrowed it down to what you destined for but but we don’t, we don’t generally do that. In financial services. For characteristics, we might because you’re 50, or 60, or like, they might do it by age, but not necessary, not by behavior. That’s really interesting. Good

Dr. Greg Davies
advisors will be doing this intuitively to clients. Right? But not all advisors are equally good, intuitive psychologists, not all of them have had all their clients for long enough to know them that that deeply. And if you inherited a book of clients from someone else, you want to be having this effect, right from the word go, rather than waiting 15 years until you figured out who do I call and who I don’t call. So it can be very effective, even for really good advisors who are doing all the right things already.

Peita Diamantidis
And we all know, like, we have bias by the way we process data anyway. And I mean by, you know, you might, we might have a picture of the, our client base, right, most of my clients are blah, whatever the thing is, but often, you know, when I chat to practices and work with them, I can see that really, that’s based on the people they either like to deal with, or that they engage with a lot. It’s actually not where the volume sits. So getting this data so they can really understand where the groups are within their business and then tailor even if it is a style of webinar or style of content for those people. Wow, that’s going to bring them much closer to the advisors into the practice, you know, which is exciting. The other thing I’m curious about is design in these things and even look, look and feel. I hark back to when I was at school we had I did high level maths, it’s called well it was called for units. For unit maths in Australia. It’s not called that anymore. But there was a textbook we’ll have to use that was written by a guy called Jim Coronavirus, and it has the worst font ever designed and it was this horrible textbook and it was all jammed in and it was all these formulas. And it was traumatic opening the book. Like before you even got to doing any of the work yet doing any of the questions, you are already traumatized and convinced you are going to fail. And I feel like we do that a little with testing for clients in our industry, where it feels a bit overwhelming and clunky. And there’s numbers on it. So I’m curious about what you guys are doing in terms of the design or the experience for the client, as they’re doing these, you know, going through these tools so that it doesn’t feel, you know, traumatic or incomprehensible to them. Yes,

Dr. Greg Davies
I think, you know, two things that we bring into our design, right from the outset, and one is trying to keep things as simple as possible, but no simpler than our profiling tools. And our fact finders are actually remarkably quick and easy to do. You know, we established one, you might be asking people questions to measure five different aspects of their financial personality. And if you answer the questions that gave us stable scores on each of those five dimensions, it wouldn’t take you longer than two, maybe two and a half minutes if you were really stretching it. Okay. Right. So just keep it because all of our questions, we just keep the style really, really clean and simple. And so keeping things short, keeps people interested. Yeah, the other one we’ve touched on already is feedback, give people something back very quickly, because that’s what keeps them interested. And people liked hearing things about themselves. The Gallup thing is, there’s loads, loads of these things. We all like hearing things about ourselves. But if I have to fill in a form, and then wait two weeks for my advisor to come back and tell me what they think, yeah, it’s not a great experience. Whereas using the technology, we can feed things back very, very quickly. And actually, far from the questioning process being off putting it can be part of the positive engagement experience itself.

Peita Diamantidis
Yeah. Okay. And Bianca, in terms of what you see people using in Australia currently, then what would you say is the difference in terms of the user experience for your tool versus what we currently use in a somewhat clunky manner for this type of questioning of clients?

Bianca Kent
Yeah, absolutely. So just to expand on what Greg said, I think another key element is there’s no math in it. So our questions don’t mean the client doesn’t have to sit there and go 20% versus 10%, and that sort of thing. So that keeps it really clean and simple, very simple things like large font, we use really large font so that everybody can read it easily. Advisors can brand it to their own colors, so you can add your logo, you can change the coloring to make sure it suits you. And, and it’s just the user experience is really simple that clients can click through question comes up at a time, if someone calls them and they need to stop and chat, they don’t lose what they’ve gone through simple things like that, just to make it really easy to use.

Peita Diamantidis
Yeah, it’s important. I mean, you mentioned maths. And once again, you know, maths freak maths is probably my natural language, if I was to have one, what I’ve come to realize, though, of years of wonderful friends that have been very open and honest with me, as I’ve sort of, you know, to learn to engage with people from different backgrounds, and different sort of experiences is, there’s a big portion of the public that actually don’t intuitively understand what a percent is, like, they truly don’t and we talk to them like they do. In fact, we talk to them, like they understand the formula you use to calculate such a thing. And that’s not because they’re stupid or not at all, it’s just it, they’ve haven’t been saturated with this, there was a moment in schooling where they had to do this thing. And, and it probably was a bit traumatic for lots of people maths was and then from that point on, why would they, you know, it’s just not something they’ve engaged with. And so I think we really need to make sure that we’re not just due to our, our, you know, funny signs and symbols we use as part of our communication, that we’re not missing a whole element of understanding, but also interaction with the client because they sort of just nodding, but not understanding,

Dr. Greg Davies
you’ll probably be happy to know that there’s lots of academic evidence in the psychology world of exactly that. People. A lot of it’s actually in the health in the health area, that people will make a very different decision if they are told 22% of people will will die of this disease versus 22 people out of 100 will die of this disease. Now you and I know those exactly the same numbers. Sure. They have very different emotional tags on them and and people will just do different things. So no, you’re absolutely right percentages, and that’s before we even come to compound even more. Yeah. The things that people just don’t have good intuitive feel for

Peita Diamantidis
No, no, not at all. And once again, that’s where storytelling plays a part doesn’t let me know. I had somebody that was talking to and I could see you know, commenting all these sort of things weren’t making any sense and and I knew that they were they actually wanted to become an Instagram influencer. Chick fil A, it’s a bit like a celebrity chef. I’m not sure that’s actually a joke, you know, but anyway, we were talking to them about that. And I said, Oh, well, you know, when there’s a post, and there’s just a couple of couple of, you know, likes, but then it just goes viral. It goes nuts in every post, you know, sorry, every like, begets more likes, it gets more likes. And then like, Yeah, I’m like, That’s compounding. That’s okay, viral on like, yes. It’s, you know, so, but it’s so true. And, you know, we can’t, we can’t judge or have disdain for that, I think there’s probably, to be fair, I think the industry for 100 years probably has had a bit of disdain about our understanding versus the public’s, when in reality, you know, their very existence is what makes us possible to do what we do. So I think that we do need to flip the script a bit there. And it’s not about talking at their level, it’s getting rid of all the almost the acronyms and things we hide behind, you know, and communicating in a real way, you know, such that you can really draw out and behaviors because it will be so insightful for them, you know, they’ll learn a lot more about themselves.

Dr. Greg Davies
It’s one of the areas, the UK regulators are starting to look very closely at information presentation, and its effect on on decisions. And you could take two people with exactly the same portfolio. And one of them, you send them a report every week, showing how all of the 50 things in that portfolio have done in the last week. And that person is going to see things flashing red every week, and are going to be nervous and stressed or anxious. Or you take the same portfolio. And every six months, you send someone a report showing how the whole portfolio has been doing on a rolling three year basis. Yeah, same portfolio, that person may never see anything read. Yeah. And they’re in a completely different emotional state, just because of the design choices of the information you’ve put in front of them.

Peita Diamantidis
Yeah, absolutely. Absolutely. And it because ultimately, as well, what you’re giving as context, you know, not information. And that’s not necessarily easy to do. But it’s absolutely necessary. And it sounds like then what you guys are providing in these tools is more context, because it’s not just the context of the outside world, it’s the context of the person that’s absorbing it. So it’s sort of bringing those two things together, so that we can really make it match. So then, Bianca, in terms of current users, are there any elements of the tickle or the tools that people just don’t really quite take advantage of the like a company for more people don’t use this? Like, are there any little gems in there that you feel like more people could take advantage of?

Bianca Kent
I think the one area that we haven’t had, as many people use is probably the risk capacity module. And that’s I think some of it’s down to, you know, they’re doing maybe cash flow elsewhere. So they they’re thinking it’s sort of a double up so that that’s one area, I think people should use a little bit more, because our version is really, you know, it’s not a cash flow, but it’s a good risk passing, and it brings their whole story together. So I think that’s the one area that if they’re not using it already, really should be using it.

Peita Diamantidis
Yeah. Okay. And in terms of the way that a practice can then engage with this, is it easy for me, because all of us, you know, have so many tech, let alone processes, let alone products to consider unfolding? Is it easy to for example, use the tool engage and just use the tools say with the stuff? Okay, let’s try this out. How do you experience that? Is it easy to do that and sort of almost trial it out? Before you then roll it out? Completely? How do you guys engage with the practice in that sense?

Bianca Kent
Yeah, absolutely. So I think, you know, when I’m doing trials with different firms, the first thing I suggest everyone does is that everyone actually completes the questionnaires itself. So do it, find out what your investor personality is, like, see what the client experiences so that they knew know what your clients are going to experience? To me, that’s the number one thing, if you know what your clients are going to experience, you can then explain it to them better. But that otherwise you don’t that that helps teach them and also, then you can get your staff involved. So say, for example, you’ve got existing clients, and you don’t want them to have to fill out their, their assets and liabilities, Your administrator can do that. So the tool lets them do that. And then the client can then finish all of the stuff that they need to do.

Peita Diamantidis
Yeah, fantastic. And so you Okay, so they, there could be a journey that then you could, you could almost take somebody down where there might be a call to talk them through, okay, this information and that could be from a support person, let’s just get that in. Alright, next step, you know, get comfy, get a cup of tea, we’re going to we’re going to dig a bit deeper, do that on your own, and then there’ll be the report like you could sort of design a way that you engage with the client to you know, extract that information such that it doesn’t feel like an extraction quite insightful, as it otherwise does. So that’s exciting. That’s some that’s an interesting way to go. In terms of then the future so Greg is there I’m imagining these sort of things you guys are working on or, or elements you’re adding so I’m curious about the next ones but I’m also curious about the GE I’d love it if you know down the track where you could take this so talk to me about where you know Astrid risk is going and what you guys are Doing but also maybe even where you and Bianca where you could like, I’d love to see this go this far.

Dr. Greg Davies
Well, I’ll see you there, the whole ESG world is still developing yet because it’s new and the regulation is coming and catching up. So that’s one area that we will continue to be developing Everly where, in my view, really, as an industry only just scratching the surface of what we can do with personalized communication and content and a matching engagement, hyper personalizing it to what we know about someone’s personality, etc, right? That is the bit where I really think we’ve got we’ve, we’ve got the baseline, we’ve got the we’ve got the personality profiling tools, we know a lot about what we want to say, but hugely systematize that so various systems are supporting advisors that that that is the really exciting bit. And then the ones are the future for me as a lot of what we’ve been talking about here as investments. And we’ve done a little bit of work on this so far. But to broaden it out from investments to look at someone’s whole financial position, financial well being debt management, savings behavior, investing the balance between short, medium, and long term, etc. Once we’ve built and tested that these, these can effectively help people make better investment decisions or get better investment advice. There’s absolutely no reason why the same engagement tools can’t be used on a much broader range of people on a much on a more holistic view of their wealth.

Peita Diamantidis
That’s yeah, that’s pretty exciting. Because I actually think that’s when you really start to shift the dial, you because To be frank, there’s no point talking about investing if you can’t spend less than you earn. You know, and so, I mean, it’s natural, it’s that that’s where we will live. So that’s where we started, but I agree with you, in terms of impact, you know, wonderful, joyful impact. That’s where it’s going to be. And interestingly, I think, certainly in Australia, and I’d be curious about the UK, I think there is some skepticism in well, government, but as well in financial services about all but people just aren’t going to pay for that. And or they won’t pay for advice. And I’m like, Well, I think what we’ve proven is they won’t necessarily pay for the advice the way it’s given. Now, you know, whereas if they could get transformation in their day to day, you know, and how they feel about their cash flow? I actually think they will in it, because they can, it’s material, you know, when it’s immediate. So I think then, yeah, that’d be really exciting.

Dr. Greg Davies
Also, and because the power of this is really doing it by bringing behavioral science together with data together with technology, it’s scalable, right? Once you’ve built it, it’s absolutely scalable. And therefore your marginal cost of delivering this to people who perhaps won’t, or can’t pay very much for it is very low. So I’m quite positive about the ability for these ideas to reach large swathes of people who are genuinely needed. I mean, of course, we have to build it, we have to demonstrate the business case, etc. You know, I think there’s a lot to be done still huge amounts.

Peita Diamantidis
Yeah. And it’s interesting. You say, like, I said, we’ve got the tool already. And but it’s then how does it you know, how do we apply it for the personalization, what’s so interesting is outside financial services. I mean, personalization is, I mean, in retail, or any widgets, you know, that sort of stuff, personalization is a given, when even small business CRMs can personalize to that extent, because so it’s sort of stunning that in financial advice in financial services that we have, we just haven’t got there. You know, and, and even to the extent of large insurance companies or platform providers, or they’re still not, they might take extent of your age, but but they’re still not doing that. And it’s so stunning, when this other side is just nailing it. I mean, a simple example that everybody’s experienced his Amazon and what you see, when you log into Amazon, like it’s the ultimate personalization of your experience, like when I log in, you know, each three of us would see a completely different Amazon logged in, because they’re collecting that and learning, you know, how to put what we want, or maybe not need, but once in front of us. And so it’s not like, it’s not like the tech or the skills need to be developed or built. We’ve just got to learn from the others that are doing it. Well, I think, yep. Yeah. So and Bianca, in terms of you watching this, like you say, it’s, it’s so early here in Australia for this, then, you know, what are you hoping or looking to see down the path of either way this applies or where you guys can take this for the, you know, Australian financial advice or the Australian Consumer

Bianca Kent
Law? I think, really, I hope, you know, we’re, we’re helping all of the advisors out there. You know, I think this is our goal is to help advisors help their clients make better decisions, and that’s what we want to do and I think this is you know, something that He’s going to help everyone. So really, I hopefully are happy, I’m going to be speaking to everyone over the next six to 12 months and helping you make make your players lives, clients lives better.

Peita Diamantidis
And I mean, it’s almost a perfect storm for this sort of tool. I think after what we’ve all just gone through, then I think, even if it’s not related to finance, I think we’ve all become very aware of how our behavior responds to external stimuli. Whether that’s a parent pandemic, or a lockdown or whatever happens, I think we’re all becoming a bit more aware of the fact that there is this, this dynamic interaction that goes on and our behavior does get influenced. So I do think there’s a great sort of wave of understanding, we can ride for these tools to help people give that insight. Is there anything we’ve missed, like any big chunks that we’ve missed, or parts of the tool you feel we should cover off?

Bianca Kent
I think the one thing I’d mentioned is that were very close to launching an updated version of the tool, with some great new graphics make it easy to use, but also a bit of functionality that I think it’s going to be really useful as a portfolio risk tool. So you imagine you’ve got a new client that’s come to you with a whole bunch of existing investments? How can you look at that risk level compared to the way you measure risk now, so you’re able to put that into the tool, and it’s going to straightaway give you a risk score for that portfolio? So you can say, oh, okay, we’ve actually assessed that you’re a medium high risk that your current portfolio is any low, so you are not where you should be. So that’s going to really help you in the advice process, particularly when you’re looking at new clients.

Peita Diamantidis
That’s fantastic. Because it’s so powerful almost to have those, it’s like a traffic light tool, right? It’s just something that line in the sand, you’re above or below, let’s take some action, as opposed to, here’s our 47 comments on you know, it doesn’t help them frame what you’re trying to put forward. Fantastic. Anything else Greg you feel we’ve missed or that you want to jump in with or any insights you think that our listeners could benefit from,

Dr. Greg Davies
I would just maybe expand on that, on that last point that Bianca was made making? I think, you know, we’re very consciously a behavioral company, that’s our DNA, but equally, a behavioral science and behavioral finance on its own isn’t that useful? Unless you are wedding it’s to a really deep knowledge of traditional quantitative finance and portfolio theory, etc. And you’ve mentioned, you know, your maths background, and I also originally have a quant quant finance and maths background. And to me the real importance here is the two have to work together, you know, the traditional tools of finance theory and portfolio theory, they kind of tell us what the right answer is in in a in a very isolated way. But it’s a pure it’s a pure right answer. It’s not the right answer for any one person, because it assumes that we’re all Spock, right? Yeah. And the behavioral science comes in and goes, Okay, we believe that we want to aspire to being rational individuals, but we accept that we’re not. So that the coupling of the behavioral science looking at emotional comfort and the stories of the narratives, but if we did only that, and we didn’t understand the realities of risk and return and that we wouldn’t really be helping people, it’s when the two come together. The traditional finance and the payroll finance, that’s kind of where we see our USP sitting at the middle.

Peita Diamantidis
Yeah. Okay. And, and well, and that’s what’s that’s what’s difficult, right? That’s the hard part. in isolation, that’s the, it’s the blending of the two. And that’s true of anything, anytime you bring, you know, two sciences or two elements together, that’s where it’s hard is the application in the middle? But I think like you, I think that’s where some, some magic is gonna happen. I guess that’s really where the alchemy is, right? It’s that little bit. And it’s gonna look like magic. But we know it’s really science. And you know, it’s going to be really wonderful in terms of the impacts that it can have on clients. Alrighty, advice explores, if you’d like to find out more about Oxford rescind the website link is in the episode shownotes along with Bianca and Greg’s LinkedIn details, so so please feel free to reach out and I’m sure they’ll point you in the right direction of who that you should talk to I’m imagine Bianca for the for the Australian advisors, probably the first protocol, but I would encourage you to follow Greg, he’s got some great content on you know, this sort of behavioral finance insights and really understanding how we bring make it real for our clients. Look, thank you so much for joining us. I’ve really enjoyed this conversation. I think, you know, these tools are the sort of things that can take us away from talking about returns and markets and start talking about human beings and the way we behave. And I think that’s how we can really transform our industry and the way we engage. So thank you for your time. And can I just say that it’ll Greg, I really think we need to get you out of out to Australia for one of these wine behavioral tasting experiences, because I reckon you guys are good. Everybody signing up at that point.

Dr. Greg Davies
But we do that with pleasure. So,

Peita Diamantidis
Bianca, your one task is to is to get you out here, I think we’d all love it. And I love learning through something that’s parallel, but not the same. So I think that’s a great a great way to go. So thank you so much for joining us.

Bianca Kent
Thank you very much. Lovely.

Peita Diamantidis
So, I you a current user of Oxford risk, really curious if you have. And, in fact, I’d love to hear from you on the ensemble platform. If you are one of the sort of earlier users in Australia, I think, you know, we’d all be fascinated about how you’re finding the tool. And in particular, you know, how you made that transition from maybe some of the older school, whose portfolio, you know, data collection, all those sort of tools into something like this. And now, as I think about, you know, tools, and the way they’ve approached this, the behavioral finance sort of angle, then, you know, I’m really excited about the possibility that we can start, you know, using these tools for the one on one experience, absolutely the early entree into our practice into the way we can add value. But then over time, we can also take those insights we’ve gained on that individual and deliver hyper personalized content and engagement, that is something that will heighten the way they engage with us, and even the way they perceive their finances, if it really feels so personal and such that we understand them that deeply. So they don’t get the generic newsletter, they get something very short on the email that’s dealing with, well, I bet you’re feeling like this, about whatever’s just happened in say, the news or markets or you know, those sort of things. So I think this concept of hyper personalized engagement over time, is something we should all aim for now, what does that mean? Peter, right. So we’re probably going to have to start to shore up the CRM data we have on clients, the way we collate it, and the quality of it, get some real rigor to our team’s understanding that we’ve got to keep that data up to date. Because as we’re gonna fold in insights from a tool like this, then the quality of the data becomes important, you know, and being kept up to date and it being relevant and timely. So, you know, the sort of sanitation efforts for our data, and our client data and our CRMs will play a part to how well we can deliver that. Now, as you know, there’s only one skill we need to become bionic advisors. And that’s avid curiosity. And we have spoken in previous episodes, I did mention chat GPT. Now, I’ve been getting a lot of questions from the community about artificial intelligence. And, you know, it’s just the the world owes those sorts of things. And so I thought, rather than talk about a particular app, um, we might just chat a little in this curiosity corner, this week’s episode about artificial intelligence. Now, last night, I watched a John Oliver episode, who’s a talking head from the States, but part comedian, part commentator, part rabble rouser. But one of the sections of what he spoke about last night was on artificial intelligence. And what was interesting about what he was saying is, you know, the current tools, we’re looking at chat GPT, these image creators, those sorts of tools that we’re seeing, and the, you know, turning up on the news and morning radio, and all that sort of things. You know, these are narrow tools, you know, meaning they’re designed to do one thing, and it’s sort of related tasks and learn how to do that one thing better over time. Right. So that’s where it’s learning and its development is it’s quite narrow. Therefore, you know, they don’t fall into the T 1000, Terminator level sort of AI is going to take over the world, right? Because t 1000, or any of those sorts of tools or imaginary characters. They are an AI designed to do everything and learn everything. Right. And so there is a fundamental difference there. I think we all need to get our head around. That said, just because they narrow and therefore don’t have immediate plans to take over the world doesn’t mean there aren’t some downsides. We sort of need to take into account. And one of them is they only learn from what we feed them as data. Now, in the case of an A say, and John Oliver actually talked about this, and I thought it was really, really interesting. And I mean, well, sort of funny too, but really interesting. He said, You know, there’s an AI tool that was developed in the healthcare space and to identify skin cancers, you know, what a wonderful thing and here in Australia, I mean, can you imagine right, very quickly identify whether that’s a skin cancer and after going through Hundreds and 1000s of images that were put through the tool. What was interesting is what it learned. That was that rulers are malignant. Now, the reason it learned that rulers, as in measuring rulers are malignant is because most pictures of a skin cancer taken after diagnosis so that they know that it’s malignant, had a ruler next to the little mole, or whatever it is, or the little freckle, have a ruler next to them to provide size content. So the tool learned that the ruler is malignant right? Now, that’s the thing that’s interesting about these tools, right, rubbish in rubbish out. And I’m not saying that that study was rubbish or anything like that. But we need to be conscious of what we’re putting in, because these tools are literal, right? And they’re going to take things literally. So for the eyes we talk about right now. And in a previous episode, we chatted about Chet GPT. And other similar then what they’re being fed is the internet, you know, and the internet is wonderful and resourceful, and has so much wonderful information. It also happens to have all that negative, aggressive, racist, sexist, and otherwise, not great content, right? All of that lives there in the internet. And so if there is a bias, and of any kind, really, you know, it may not be sexist, or racist, or any of those things, but it just could be a bias of any kind in that data or in in the internet, then the tool being fed that information very quickly incorporates that bias into its outputs. So what that means is, for example, in financial services, it could mean that it’s seeing the history, there’s a bias towards rapid growth in markets, depending on what timeframe you give it, therefore, it’s going to have a bias to assume that there’s always going to be growth, or, you know, I mean, there’s all sorts of ways that we can start to see that these these could go wrong, you know, and the challenge is, there’s a whole lot we just won’t be able to predict either that we never would have thought of. So I guess this is not me being doom and gloom, you know, I’m really not that human being but I guess, you know, as we use these tools, we need to take this into account, what information is going in, therefore, what am I getting out, doesn’t mean we don’t use them, it just means we do it with our eyes open, you know, our minds open, maybe even our hearts wide open, right, so that we can think about the emotional impact of these things, the emotional information going in, and therefore what comes out. So I just thought it was worthwhile covering that I’d love to, to hear your perspective on on AI and and you know, where it’s going and any thoughts that prompts. So, you know, please reach out or post on the Ensombl community because I think this is a conversation we should just keep on having this isn’t, this is not a line in the sand. This is not a moment in time, this will be an evolution that goes on for a very long time. So let’s keep that conversation going. Because that will elevate all of our understanding of the positives and the risks. Well, that’s all we’ve got for this week, be sure to subscribe to the podcast, so you’ll get your advice, tech fix automatically sent to you each Friday. And you know, I’d really love to hear what session or webinar, you would love me to run in the future. You know, what, how to session what Hot Topic would add the most value? You know, is there a particular section of advice tech that you’d love an introductory session on? What would you like to learn more about how can I add value to you when it comes to advice tech or business transformation efficiencies, systems and processes. If you’re keen to have me as a speaker at your dealer groups next event or your associations next event, please don’t hesitate to let me know and I will happily reach out to them. Y
ou can find all of my details on LinkedIn at forward slash Peita MD That’s p e ITAMD. Otherwise, I’ll look forward to turning up in your earbuds next week. And remember advice explorers Stay curious.