Investment firms increasingly rely on algorithmic trading systems that can analyze market data and execute trades with remarkable speed and...
GMAT Information and Ideas : (Ideas) Questions
Investment firms increasingly rely on algorithmic trading systems that can analyze market data and execute trades with remarkable speed and precision. A recent analysis found that these automated systems could match the returns achieved by experienced financial advisors over a two-year period. While some financial advisors worry about being displaced by such technology, industry analysts argue this scenario is improbable.
Which finding, if true, would most directly support the analysts' argument?
The automated systems in the analysis were able to execute trades significantly faster than human financial advisors could.
Research indicated that building long-term client relationships and providing personalized financial guidance involve emotional intelligence and trust-building that only human advisors can offer.
The analysis showed that neither the automated systems nor the financial advisors achieved positive returns in all market conditions during the study period.
Many financial advisors surveyed reported having limited experience with the specific algorithmic trading strategies used in the automated systems.
Step 1: Decode and Map the Passage
Part A: Create Passage Analysis Table
| Text from Passage | Analysis |
|---|---|
| "Investment firms increasingly rely on algorithmic trading systems that can analyze market data and execute trades with remarkable speed and precision." |
|
| "A recent analysis found that these automated systems could match the returns achieved by experienced financial advisors over a two-year period." |
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| "While some financial advisors worry about being displaced by such technology, industry analysts argue this scenario is improbable." |
|
Part B: Provide Passage Architecture & Core Elements
Main Point: While algorithmic trading systems can match financial advisor returns, industry analysts believe advisors are unlikely to be displaced by this technology.
Argument Flow: The passage establishes that algorithmic trading is becoming prevalent and can match human performance, then presents a debate between financial advisors who fear displacement and industry analysts who believe such displacement is unlikely.
Step 2: Interpret the Question Precisely
What's being asked? Which finding would most directly support the industry analysts' argument that advisors won't be displaced.
What type of answer do we need? Evidence that strengthens the position that human financial advisors will remain relevant despite algorithmic trading capabilities.
Any limiting keywords? "most directly support" - we need the strongest, most relevant piece of evidence for the analysts' position.
Step 3: Prethink the Answer
- The analysts argue that financial advisors won't be displaced despite algorithmic systems matching their returns
- For this argument to be strong, we need evidence that shows human advisors provide something unique that automated systems cannot
- Such evidence would include human-specific capabilities or services that algorithmic systems cannot replicate
The automated systems in the analysis were able to execute trades significantly faster than human financial advisors could.
- This finding actually supports the technology's advantages over humans
- Speed of execution is a strength of algorithmic systems, not evidence against displacement
- This would make analysts' argument weaker, not stronger
Research indicated that building long-term client relationships and providing personalized financial guidance involve emotional intelligence and trust-building that only human advisors can offer.
- Identifies emotional intelligence and trust-building as uniquely human capabilities
- Shows that long-term client relationships require human elements that algorithms cannot provide
- Directly supports why advisors won't be displaced - they offer something automated systems fundamentally cannot
The analysis showed that neither the automated systems nor the financial advisors achieved positive returns in all market conditions during the study period.
- This finding shows both systems and humans have limitations in certain market conditions
- Doesn't establish any unique human advantage that would prevent displacement
- If anything, it suggests both approaches have similar weaknesses
Many financial advisors surveyed reported having limited experience with the specific algorithmic trading strategies used in the automated systems.
- Limited experience with algorithmic strategies is about knowledge gaps, not unique human value
- This could actually suggest advisors need more training rather than being irreplaceable