Advisors: Time to reinvent yourself – and your business
Ric Edelman: It's Monday, January 30th. Welcome to the program. I'm pretty excited. That webinar I did last week for the Museum of American Finance and the New York Public Library was Financial Planning in the Age of Longevity. The folks at the New York Public Library told me that it was the most successful webinar they have ever staged. Twice as many people attended that event as they've ever had at any of their webinars. Now, if you missed that event, well, too late - you missed it. But not all is lost because that webinar that I presented last week at the New York Public Library online site is also the subject of one of my masterclasses. Yeah, Financial Planning in the Age of Longevity. And you can go watch this Masterclass, which is pretty much the same as I presented last week for the New York Public Library, you can watch the masterclass for free. Just go to TheTruthAYF.com and you can get it there.
Speaking of The Truth About Your Future and Financial Planning in the Age of Longevity, well, The Truth About Your Future was my book published back in 2017. And in that book I warned you that artificial intelligence would disrupt us in the future. Well, guess what? The future has arrived. Just like I said in my book in 2017, this is both really exciting and really scary.
ChatGPT. Have you heard of this? This is a chatbot. It was launched in November by a company called Open AI. ChatGPT - Well the GPT stands for Generative Pre-trained Transformer. That's gobbledygook. Doesn't make a whole lot of sense to me anymore than it does to you either. But bottom line is ChatGPT is a chatbot. And you know what that is? A chatbot is an artificial device that mimics a human when you talk to it or when you trade emails with it. You've used chatbots. When you go on to a website and you click on the helpdesk. Chances are you're interacting with a machine. You know that too, because these things are pretty limited. Often you get downright nonsensical responses.
But ChatGPT is a huge leap forward in capability. This new chatbot can write computer programs and debug them. It can compose music, write plays and poems. You can also write student essays and put answers on a test. Often, better than average human test takers. And if you try to trick it, it knows when you're doing that. Ask it how much of the vote John Kennedy got in the 1964 election. And it will tell you that Kennedy wasn't in that election, that he was killed in 1963, and that when Lyndon Johnson won the 1964 election, he got 61% of the vote.
How does this new program work? It scans the complete Internet. It grabs facts and identifies patterns in human conversation and repeats them back to you - the human, using human style communications.
Why is everyone frenzied with ChatGPT?
As you can imagine, everybody's raving about this. The New York Times says that this is the best artificial intelligence chatbot ever released to the public. The Atlantic called it the Breakthrough of the Year and said it's going to change our mind about how we work, how we think, and about what human creativity really is. Elon Musk tweeted that it's “scary good.” Google's CEO says it has the potential to disrupt the search engine business, and it almost certainly will. Microsoft just announced that they're investing $10 billion into the company that makes this new program. But yeah, everybody's raving about it, but not necessarily raving in a good way.
However, some folks are unhappy about this new leap forward in AI technology. Paul Krugman, he's a Nobel Prize winning economist. He's worried that ChatGPT will reduce the need for knowledge workers. What do I need you for if I can just ask the chatbot?
I remember years ago, I got a phone call from a dear friend of mine, Anne Marie. She was out to dinner with her girlfriends and she called me and she said, Hey, Ric, what's the name of the lead singer in Renaissance? She knew I was a big fan of that band. We, in fact, arranged to have them do a concert at our college when we were there. So without hesitating, I said, Annie Hessler.
Well, today, I'd never get that phone call from Anne Marie. She would have just asked Siri or Alexa or now ChatGPT. Us humans having knowledge that people pay us for, that they seek us out for? Forget it. You can get that knowledge, that information anywhere for free instantly. And I'm not just talking about trivia contests. Why pay a journalist $150,000 to write stories for your newspaper every day? Just tell ChatGPT to write the articles. It does a great job and it's free. By the way, the Associated Press, Forbes magazine, they're already doing that.
You need a lawyer? Forget about hiring a lawyer. Use ChatGPT. If you get a speeding ticket, go to court to fight it. Plug in the software that's provided by a company called Do Not Pay. Their chatbot will tell you what to say to the judge in response to their questions. Do Not Pay is even offering $1 million to the first lawyer who uses its chatbot at the Supreme Court.
Now, like I said, this isn't new. I warned you about all of this back in 2017 in my New York Times bestseller, The Truth About Your Future. That's why this podcast is called The Truth About Your Future. I wrote in my book about Ross. Ross is an AI attorney. Law firms worldwide use Ross to pore through thousands of legal documents to find the info they need that will help the law firms win their cases. Ross is faster and more accurate than recent law school graduates. It can instantly find any obscure court document or court ruling, no matter how old it is. And it can explain everything in plain English, something lawyers struggle to do. Ross is intuitive and understands questions. It gives legal references and citations and it costs $69 a month. With ChatGPT, we don't need writers or lawyers or...gee, what do we need?
Will everybody who works in an office become obsolete? It's not just the employment rate that some economists are worried about. Economist Tyler Cowen is worried that its effect is going to be negative on democracy. Will Congress and government agencies use this tech to write new laws and regulations? And what about artists and the entire creative process? Back in September at the Colorado State Fair, they had an art competition and a guy submitted an entry that was a painting created by AI, and he won first prize. The judges said that they didn't know that a machine had created the art, and that even if they did know, they still would have voted it as the best artwork in the competition because it was the best. And you've probably heard about the guys who used AI to finish Beethoven's 10th Symphony. He died in 1827 before he could complete it. But now we've got it. Listen to this. What you just heard was not written by Beethoven. It certainly sounds like it was. But no, it was written by AI.
Do we really need any human artists anymore? And what about cybersecurity? ChatGPT can write phishing emails and malware.
And how about education? ChatGPT has now passed a law and economics exam at George Mason University. Economics professor Alex Tabarrok says the AI perform better than a lot of his students. Professors at Dublin City University and Trinity College just published a paper showing that ChatGPT can write financial research papers. At the University of Pennsylvania's Wharton School of Business, a professor there says that ChatGPT just earned a B on his operations management test. At the University of Michigan's Ross Business School, Professor Jerry Davis says, "Our whole enterprise in education is being challenged by this and it's only going to get more challenging. Time for a top to bottom rethink". And in London, the dean of the Imperial College Business School said, "We're having serious discussions analyzing the implications of GPT". In California, a high school teacher called GPT, the end of high school English. The journal Nature says teachers should be worried that students will use this software to write their papers. At Furman University, Professor Darren Hick says he's now giving students individual oral exams if he suspects that they submitted a paper that was written by AI. And within a month of ChatGPT's launch, its use by students was banned by the New York City Department of Education.
So everybody's talking about ChatGPT, but no one's talking to it about all this. So the Financial Times did. It asked ChatGPT whether or not it's going to kill the value of an MBA degree and ChatGPT's response? "Unlikely. While AI and machine learning can automate certain tasks and make them more efficient, they do not yet have the ability to fully replicate the complex decision making and critical thinking skills that are developed through MBA programs. Additionally, MBA programs provide networking opportunities and access to industry professionals that cannot be replicated by technology."
The fact that ChatGPT was able to provide so intelligent and so thoughtful an answer, tells you everything you need to know. As I told you in my book, The Truth About Your Future, the future's coming. And now in many ways, it's already here.
Advisors: Time to reinvent yourself – and your business
Now, if you're a financial advisor, the real question for you is whether ChatGPT will replace you. I mean, the thing just passed Wharton's MBA exam. It just passed the test to get a US medical license. Do you really think it would struggle to get a securities license? Amy Weber is the CEO of Cambridge Investment Research. Her firm is one of the largest investment advisory firms in the country. They've got $82 billion in assets under management. She says the industry has something to worry about.
Doug Ketterer, CEO of Atria Wealth Solutions, they got $100 billion in assets. He says AI could replace advisers in the next five years. "This is definitely on the horizon," he says. So what do you do if you're an advisor? You need to shift your entire business. This isn't for the first time. Back in the 1970s, brokers had the content. The only way you could find out the price of a stock was by calling a broker.
PaineWebber and Merrill Lynch and the others, they all used to have big office lobbies. Men would come in there and sit all day smoking their cigars, watching the ticker tape run across the screen to see what stock prices were at. But then CNBC came along. They started showing stock prices on TV, 15 minutes delayed. But now you can see stock prices for free in real time right on your phone. Nobody calls a broker anymore to get a stock price. Nobody calls a broker to get research on investments either. Just go to Schwab. They've got massive amounts of research and stock charts and historic data. All of it is free.
So brokers aren't brokers of information anymore. Today, brokers are advisors. You give advice to your clients. You don't tell them what the market's doing. They already know that. Or they certainly can find out faster than by calling you. But what you do is you give them advice about what to do about the stock market based on what it's doing. You turn the information into action. That's how advisors have made themselves more valuable to clients than ever. You didn't go out of business when everybody quit asking you for a stock quote.
And now we've got ChatGPT. And now you've got to reinvent yourself one more time. Your clients are no longer going to ask you if they should refinance. ChatGPT can tell them that. What you need to do is something that ChatGPT can't do, at least not yet, not for a long time.
ChatGPT can tell your client about what's happening with interest rates, whether the Fed is going to keep raising rates and where they can go for the best mortgage loan. ChatGPT scours the internet. All that information is instantly available right there. But what ChatGPT can't do is say anything about your client. ChatGPT knows nothing about your client chat. It has no idea how much money your client has or how your client feels about risk or what your client's goals are. You're the only one who can take that information that anyone can get on the internet and apply it to your client.
So as an advisor, you shouldn't feel threatened by ChatGPT. Instead, you must learn how to use it as a tool so you can dump those time consuming, boring manual tasks and focus instead on giving your clients the personal, individual advice that only you can provide thanks to your intimate familiarity with your clients' emotions, psychology and family dynamics. ChatGPT can help you build a better practice than ever that makes you even more valuable to your clients than you were ever before.
Or you can just keep on doing what you've been doing. And by 2030, you'll be out of business. And for those advisors who will be out of business by then, good riddance. We must all embrace tech. You can try to ignore it. You can try to stop it. You'll fail.