Machine vs Human: Delegating Financial Decisions

For financial decisions, should I "outsource" my brain to an algorithm or to a smarter human? Or in other words, what's the optimal mix between relying on Machines vs Humans regarding delegating financial decisions?

A colleague (thanks PHD / Professor @andrewsarta) verbally paraphrased delegating financial decisions insights and opinions with me, which was prompted from a Management Science publication titled "Delegation Decisions in Finance". His insights and the publications were fascinating. Here are my takeaways:

"... regarding drivers and motives of clients’ choices to delegate investment decisions to agents ... clients favor delegation to investment algorithms, followed by delegation to finance professionals compensated with an aligned incentive scheme, and lastly to finance professionals receiving a fixed payment for investing on behalf of others ... trust in investment algorithms or finance professionals, and clients’ propensity to shift blame on others increase the likelihood of delegation, whereas clients’ own decision-making quality is associated with a decrease in delegation frequency ... Delegating financial decisions is the primary route to financial market participation for many individual investors ... it's important to establish trust in the finance industry in general and in money managers—including investment algorithms—in particular."

With a better understanding of client behaviour, which approach performs better for clients? To past, present and future MBAs ... the two-line answer is ... IT DEPENDs:). In some studies that I've come across, robo-advisors outperformed human financial advisors and in others, human financial advisors outperformed robo-advisors. Currently, many Canadians are moving money into high interest savings accounts (HISA) and GIC's to wait out the depressing returns from market performance; however, many long-term investors are still investing in the market. As financial services are historically a low engagement category, there is absolute value in a capability or professional taking on the burden of knowing when to act and the right combination of financial products to maximize returns.

Financial institutions often make their clients (and their money) work hard for them when they should be leveraging technology to work hard for their clients ... be it advisor or algorithm led financial recommendations, the focus should be providing incentive aligned, proactive recommendations to exceed clients' financial goals. Also, and this is going to be the game changer, to instill trust, will more financial service providers make a guarantee and take responsibility for the performance (and blame as clients need to point a finger as evidenced by the report)? Some financial products already provide a guarantee, including a floor and ceiling return, within agreed upon timeframes; however, can guarantees expand to more investment products and portfolios to increase confidence and trust? I'd sign up for that :)