+27 11 453 3048

I was sitting in a presentation last week by a well-known South African asset manager and a lot of the light hearted comments revolved around the recently launched ChatGPT.  ChatGPT is a chatbot which interacts in a conversational way.  According to its creator, OpenAI, the dialogue format makes it possible for ChatGPT to answer followup questions, admit its mistakes, challenge incorrect premises, and reject inappropriate requests.

In development for a number of years ChatGPT was finally launched at the end of November 2022 as a free application to users with a plan to monetise it later in the future.  This “free” stage is a form of product development as the more users the more “dialogues” the chatbot will have.  To say that ChatGPT has taken off since the launch of the application would be an understatement.  In the graphic put together by Statista they demonstrate that ChatGPT reached one million users in just 5 days, around 15 times quicker than the previous record holder Instagram.  

This huge takeoff of ChatGPT has put Artificial Intelligence (“AI”) and its realm of possibilities in the forefront of many people’s thinking.  What would I use AI for?  Am I at risk of AI?  One of the running threads of light heartedness through the presentation was that we would be replaced in our job by robots.  We at Magwitch fortunately have the opinion that humans still have a place in society!!! 

The pace of technological advancements is breathtaking.  Ideas that were barely conceived ten years ago are now already mainstream.  We expect this pace to continue to increase and thus it is realistic to say that the financial services industry will be impacted by AI.  But who would be at the greatest risk of losing relevance?  Some publications may have you believe that financial advice is at risk of being “replaced by robots”.  But roboadvisors have been around for a while now with limited success.  In fact in tomorrow’s world the Financial Advisor may have an even more critical role to play.  It doesn’t take a rocket scientist (or a clever computer) to work out that there will be a greater number of investment products which claim to have their investment theory and stock selection based in AI launching over the next few years.  But how does the investor, with their capital, make a decision of what to use and where to invest?  

Providing tools and platforms does in theory increase ease of access.  These days most of us plug our symptoms when feeling a little ill into Doctor Google which proceeds to explain to us that we are fatally ill, and lucky to still be sitting at a keyboard.  What the “good doctor” fails to appreciate is that as humans we tend to be at the poles of emotion.  Google did nothing wrong in returning the appropriate information based on what I put in as an input, it was my fault in not being able to define my condition appropriately.  We foresee that the role of the Financial Advisor will expand to be the interface between investor (and capital) and the machine.  The Financial Advisor is the expert in the terminology within the industry, the Financial Advisor is the empathetic human that can understand the personality of the investor, and ultimately the Financial Advisor is the one that frame the input in the correct manner to get a meaningful answer.

This is backed up by another graphic from Statista.  It is a slightly older graphic (in the old days of pre ChatGPT) as was derived from a survey conducted late 2021.  The question was how will AI change our lives and it is noticeable that the area of lowest impact/change was personal relationships. 

thHumans are generally, by nature, social people and human interaction is one of our key needs.  Included on Maslow’s Hierarchy of Needs is both esteem & love and belonging.  Engaging with the cold calculating computer may not fulfil everyone’s needs.  And besides who is the investor going to moan to when their investment doesn’t do what they had hoped?

So if the Financial Advisor is at limited risk of being replaced by a robot, then who is at risk?  Well the answer is the asset manager.  Asset management has gone through one big seismic change with the rise of passive investing but is another on the way.  Whilst emotion is unavoidable in dealing with your own money, it is to be avoided when dealing with other people’s money.  Perhaps the cold calculating computer won’t be swayed by the fact that its breatheren made a mistake.  Humans on the other hand are easily swayed.  The share price of Alphabet dropped 8% when its own AI chatbot gave a wrong answer – over $100bn erased off its market capitalisation.  Does one wrong answer mean that Alphabet has lost 1/12 of its value and its AI offering is worthless.  Definitely not, it probably just means that the chatbot had a poor teacher (humans).

For anyone looking to invest in all the developments in the fields of AI and Robotics there are many interesting ETFs out there.  Not least the iShares Robotics and Artificial Intelligence Multisector ETF (“IRBO”) launched in 2018. 


* In a demonstration of the struggles dealing with AI the header graphic was created using artificial intellingence.  We used the program FreewayML to design our image by asking it to give us a “grey robot wolf with golden eyes”.  The used image was about the 70th iteration that we finally accepted through dwindling patience.  Perhaps we needed a graphic designer to frame our input better…..


Magwitch Offshore is a leading provider of Global Balanced ETF portfolios with products in all major currencies. Magwitch utilises an advisor distribution model and their portfolios are available through offshore endowment structures provided by some of the larger Insurers.