Decision Prosthetics – Combining humans and technology to get the best out of both

By: Greg Davies, Oxford Risk

When a doctor tells you they need to ‘run some tests’, you trust in two things:

First, that the tests are accurate. You don’t want a rushed calculation by a potentially overworked professional holding another hundred patient situations in their head.

Second, that the doctor doesn’t blindly leap from test result to prescription. You want results to be an input into a system of diagnosis and discussion where the final decision is made in a way that understands you’re a human and interprets the complex interplay of inputs accordingly.

In diagnosis, humans are fallible; biased and subjective, much can be productively delegated to a more accurate digital helping hand.

In prescription, the machines are fallible; unable to effectively account for values and feelings, here human discussion overrules algorithmic interpretation.

Diagnosis of a financial situation can be just as complex as a medical one. The aim is not to reduce the complexity – that would be to trivialise the problem, not solve it; an answer coming easily does not mean it comes accurately. Or usefully.

The aim is to reduce the human fallibility in dealing with the complexity. Humans should use decision prosthetics: purposefully designed scientific tools and technology that support the adviser’s art, not replace it. That reduce noise and inconsistency, and that guide humans in their complex task of assessing values, ambiguity, and providing emotional comfort.

For financial advice this requires a suite of complementary tools that accurately diagnose an investor’s financial circumstances and financial personality – that matches their unique recipe of willingness to take risk, and financial and emotional abilities to take risk, to the universe of available investment solutions. And keeps an automatic eye on it over time as circumstances inevitably change.

In high-stakes decision-making environments, humans need help. Managing so many moving financial and emotional parts requires a blend of human and technological qualities. With the right data, the right design and the right digital support, decisions can be made both more efficiently and more effectively.

Doctors still call the shots and manage their patients, but diagnostic decision-support tools help focus their aim and fine-tune their relationship with the patient.

Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.