There’s an article doing the rounds called “The Intelligence Curse” by Luke Drago. It’s been widely shared, hotly debated, and if you work in any industry where relationships drive revenue, it deserves your attention. Not because it’s necessarily right about everything, but because the question it asks is one that every leader in financial services will eventually have to answer.
The argument is this. Throughout modern history, powerful organisations, whether governments or corporations, have invested in people because people are where the value comes from. You build schools because educated citizens create taxable economic activity. You train your staff because skilled employees generate revenue. You invest in your sales teams because relationships drive business. The entire model works because there’s a clear incentive loop: invest in people, people create value, you capture a share of that value.
Drago’s provocation is that artificial general intelligence breaks that loop. If machines can do most economically valuable work as well as or better than humans, what happens to the incentive to invest in people? His answer, drawn from the economics of oil-rich nations, is uncomfortable. Countries that derive their wealth from natural resources rather than their citizens tend to stop investing in their citizens. Venezuela, Equatorial Guinea, the DRC. Trillions in mineral wealth, populations living in poverty. The resource generates the income, so the people become irrelevant to the economic equation.
He calls this the “intelligence curse,” and argues that AGI could function the same way. Once intelligence itself becomes a resource that organisations can generate through technology rather than cultivate through their workforce, those who control it have no structural reason to invest in the people who used to provide it.
Why this matters if you run a distribution business
You don’t need to believe we’re five years from artificial general intelligence to find this useful. The pattern Drago describes is already visible in a milder form across financial services. Every time a lender replaces a BDM team with a digital portal and a chatbot, the underlying logic is the same: the technology can do the job, so why pay for the person?
I wrote recently about Rory Sutherland’s doorman fallacy, the consultant who replaces the hotel doorman with an automatic door and claims the cost saving without being held accountable for the value destroyed. The intelligence curse is the doorman fallacy taken to its logical extreme. Instead of replacing one doorman, you replace the entire concept of investing in people because the return on investment in technology looks better on the spreadsheet.
But here’s the thing Drago acknowledges and that mortgage professionals know instinctively: the spreadsheet doesn’t capture everything. It doesn’t capture the broker who refers three cases a month because they trust your BDM. It doesn’t capture the client who stays loyal because someone remembered their name and understood their situation. It doesn’t capture the fact that a phone call converts at 30% while a website converts at 0.5%.
The resource curse countries Drago references aren’t just poor because their governments are corrupt. They’re poor because removing the incentive to invest in people creates a cascade of underinvestment that compounds over decades. Schools deteriorate. Infrastructure crumbles. Talent leaves. The same dynamic can play out in a business that decides technology is the answer and people are the cost.
The mortgage industry sits right in the middle of this
We’re in an industry where trust is the product. The mortgage itself is a commodity. Rates are comparable. Products are interchangeable. What differentiates one broker from another, one lender from another, one network from another, is the quality of the human relationship. The adviser who understands the client’s situation. The BDM who picks up the phone when things go wrong. The case manager who chases the solicitor so the client doesn’t have to.
If the intelligence curse thesis is even partially right, the pressure to replace these people with technology will only intensify. AI can process applications faster. It can source products more efficiently. It can generate compliance reports without human error. And every time it does, someone in the business will ask: why are we still paying for the person?
The answer, and it’s one that leaders in this industry need to articulate clearly and defend vigorously, is that the person is where the trust lives. Technology should be the thing that frees your best people to spend more time building relationships, not the thing that replaces the relationships entirely.
The companies that will thrive in the next decade are the ones that understand the difference between automating process and automating judgment. Between using AI to handle the admin so your adviser can spend more time with the client, and using AI to handle the client so you can spend less money on the adviser. Those two strategies look similar from a technology procurement perspective. They produce radically different outcomes for the business.
The question worth asking
Drago ends his article with a call to action: change the incentives, and you can change the outcome. For mortgage leaders, the incentive question is real. Are you building a business where the best path to profit runs through investing in your people? Or are you building one where the people are a cost line to be optimised away as soon as the technology is good enough?
The intelligence curse isn’t inevitable. But it is the default. And defaults have a way of becoming reality when nobody actively chooses a different path.
The original article, “The Intelligence Curse” by Luke Drago, is available at: https://lukedrago.substack.com/p/the-intelligence-curse