The findings of Mercer’s recent survey highlighted AI’s transformative potential across data analysis, idea generation and portfolio management.
While AI adoption has surged over the past year, Mercer noted this growth is the result of three years of behind-the-scenes development.
“Today’s players are in an arms’ race to deliver next-generation, game-changing technological solutions,” said Nick White, global strategic research director at Mercer, during a recent webinar.
“Every CEO has replaced the word ‘technology’ with the word ‘AI’ because they all want to be doing more there and be seen to be doing more.”
The AI Integration in Investment Management 2024 survey, which polled 150 asset managers, revealed that 90 per cent are actively using or plan to incorporate AI into their investment processes.
Current usage primarily focuses on enhancing data analysis and idea generation, while a smaller group employs AI for portfolio construction, asset allocation and rebalancing.
“Machine learning is predominantly used to improve portfolio implementation efficiency rather than to predict returns,” one respondent said.
More than half of AI-integrated teams reported using AI insights to inform – rather than dictate – investment decisions, with 20 per cent noting that AI proposes decisions that human managers can override.
Despite its promise, Mercer emphasised that AI’s commercial impact on assets under management and revenue remains uncertain.
White underscored the need for asset managers to build AI expertise, as the technology continues to disrupt industries.
“The gap between leaders and laggards will naturally be greatest in the industries where AI is causing the most disruption,” he said.
AI to become key revenue strategy
Deloitte’s October outlook revealed a growing industry focus on shifting AI from process efficiency to revolutionising sales and distribution strategies in the year ahead.
As part of its research, the professional services firm found that some investment managers are already hopping on the opportunity – with the likes of Amundi, Wealthfront and Vanguard developing in-house AI-powered tools to support customised portfolio recommendations based on specific customer risk tolerances.
“These AI-powered tools are designed to analyse data from client interactions to gain real-time insights at both macro and micro levels of investment managers’ client base,” the company said.
“Equipped with this level of detail about the current needs of their clients, sales teams can more effectively tailor specific fund recommendations.”
Meanwhile, other firms are beginning to use generative AI to develop personalised marketing strategies for existing and prospective clients.
Looking ahead to 2025, Deloitte said usage of AI in distribution initiatives is expected to expand at both “modest” and “heavy” degrees, as the potential benefits to revenue growth become clearer for the investment management industry.
