This story at Bloomberg (courtesy of the Seattle Times) is absolutely amazing.
Here’s the rundown: Google purchased an Artificial Intelligence company, Deepmind, and recently told its new system, “save us money on our power bill.” The AI software followed suit and saved Google a ton of money on electricity by intelligently controlling over 100 variables in selected data centers. The software viewed saving power as a game where saving electricity is like scoring points. It learned this system after being taught how to play Atari video games.
I couldn’t help but wonder about the implications for investing and financial technology. Isn’t investing just like saving electricity, where “scoring more points” comes from improving a person’s chance of financial success? Is this kind of software already in place? How would it change the future? Well, we do have TLH+, Betterment’s algorithmic tax-loss harvesting, which is a good start for investors, but the real potential likely lies in financial planning. It’s really, really hard to automate away the judgment calls of a planner/advisor but we will probably get close, and likely close enough for it to work for most people.
I can imagine a scenario where the planning process starts with an extremely intelligent on-boarding questionnaire and the advisor is there to answer questions of the AI, and not necessarily the client. In the future, will the advisor jump in when the AI sends the alert “human intervention needed”? It can easily be argued the #1 job of an advisor is on the psychological support side of investing anyway, so it makes a lot of sense. We’ll see….