The Next-Gen Paradox: Why More Automation Demands Better Human Advice
Source: ChatGPT

The Next-Gen Paradox: Why More Automation Demands Better Human Advice

The future of asset management lies in both digital efficiency and old-fashioned human insight.

If I had to choose two of the most important factors shaping the asset management industry over the next decade or two, I’d have to go with

  • generational change (driving new client behavior) and
  • technological advancement (in particular automation).

And if pressed to choose which of these will have a greater impact, my instinct would be to take technology. That’s because increasing digitization and automation is threatening to remake the industry from the ground up, among other things by replacing asset and wealth managers with algorithms.

(Of course, this isn’t a problem facing asset managers alone. Almost everyone is potentially affected, including humble corporate communications and content specialists. But that’s for a different post.)

But is technology really the whole story? On this week’s podcast I spoke with Myriam Ouahla Deblanc, the Founder and CEO of ProFin Partners, and that talk reminded that something a bit more nuanced is most likely going at the intersection of technology and human advice.

The New Kids on the Block Don’t Want to Wait

Myriam mentioned that her clients – most of whom are around 55-60 years old – are increasingly confronting a disconnect with the next generation who stand to inherit their wealth.

"The big change happened with COVID," Myriam told me. "A lot of private banks could not sustain the demand of the next generation. They wanted to do Bitcoin, they wanted to do futures, they wanted to do the VIX, they wanted to play volatility."

This next generation is rejecting the traditional structures of wealth management, with their paperwork, delays, and perceived lack of innovation. As Myriam puts it: "The next generation is changing in the way there's little commitment, little time. They want it now, quick, at a good price, and then they move on to the next investment."

The numbers back this up. According to Cerulli Associates, approximately $84 trillion will transfer from baby boomers to younger generations over the next 25 years. Yet sutdies have shown that most millennials would rather go to the dentist than listen to a bank's advice.

This creates a fundamental problem for traditional wealth management approaches. The advisory model that worked for decades is being rejected by the very people who stand to inherit the wealth.

"There's a huge contradiction with the procedures, regulation and the new generation of investors," Myriam observes.

The Technology Trap

The knee-jerk response from many institutions has been to go digital – create slick platforms, automate everything possible, and try to make investing feel more like using Instagram than visiting a leather-chair-filled office.

But Myriam sees a danger in this pure-technology approach – what we might call the "Video Game Effect" of financial technology.

But without guidance, automation can lead to endless iterations without strategic thinking. Technology becomes an end in itself rather than a means to better outcomes. We get more quantity, less quality.

This effect doesn't just impact professionals. Individual investors can fall into the same trap. The gamification of investing through trading apps creates the illusion of control and mastery, while potentially increasing risk-taking behavior without deeper understanding.

As Myriam puts it, today’s investors “are accessing investment solutions in a much easier way, but whether they have time to digest what they are investing in is another question.”

The industry is also witnessing what Myriam describes as an abdication of responsibility: "A lot of people will hide themselves behind the machine. Say, oh, it's not me, it's the machine. It's the client who logged in and actually pressed the wrong button."

This is a path that leads to commoditization and a race to the bottom on fees – not a sustainable future for advisors who want to add genuine value.

What Next-Gen Investors Actually Need

Here's where things get interesting: The very same next-generation investors who are rejecting traditional financial services may be losing something they don't realize they need.

Despite their comfort with technology and self-directed platforms, millennials are increasingly drawn to complex alternative investments – private equity, venture capital, crypto, art, and other non-traditional assets. But these are also some of the most complex, volatile and opaque investments around, precisely the areas where human guidance is most valuable.

With this in mind I thought Myriam sounded credible when she said "I think we need advisors in the future." Not old-school asset managers focused on products, but advisors focused on partnership and alignment.

This alignment – being in the trenches together with clients rather than selling to them – might be the most important element next-gen investors are missing in purely digital experiences. The paradox is that they might not know they need it until they face their first major market downturn or investment disappointment.

Don’t Count the Human Out Quite Yet

The path forward isn't either pure technology or pure human interaction – it's a thoughtful integration of both.

As Myriam puts it succinctly: "You have to combine artificial with human intelligence."

Technology should handle what humans don't need to do: "The artificial intelligence is here to do the things that you don't have the time for, but then it gives you time to think."

This is where we see the true power of platforms like GenTwo's. By standardizing and streamlining the creation of investment products, such platforms don't replace human judgment – they amplify it. Advisors can focus their time and expertise on understanding client needs and crafting appropriate solutions rather than wrestling with the mechanics of product creation.

This hybrid approach serves both sides of the market:

For asset managers and advisors, it means:

  • Focusing time on high-value activities while automating routine processes
  • Offering innovative products that weren't previously feasible at small scales
  • Creating genuine differentiation through relationship quality and judgment

For investors, especially next-gen, it means:

  • Getting the speed and convenience they demand
  • Accessing alternative investments previously unavailable to them
  • Having a trusted guide when they need one most


Best,

Tom

Annie Freres

Neurodiverse Learning Specialist 🌳🌻 Intuitive Trauma-Healing Expert 🌈💫 Creative Peace Activist ☮️🕊️

3w

💯🫶💖💫

Like
Reply

To view or add a comment, sign in

More articles by GenTwo

Insights from the community

Others also viewed

Explore topics