2024 predictions: AI will reshape asset management hiring needs
This is a four-part series of thematic predictions for 2024. This is the third story.
For asset owners and the asset management industry in 2024, hiring the right people and successfully implementing various solutions will all be key to successfully benefitting from the development of artificial intelligence
The rapidly rising popularity of ChatGPT in early 2023 made the public aware of the capabilities of AI and hyped up the technology’s potential for both usage and investment cases.
In the asset management industry, generative AI — artificial intelligence capable of generating text, images, or other media using generative models — has “turbocharged” the entire conversation around technology and data as well as how it can best be used, according to Marisa Hall, head of WTW’s Thinking Ahead Institute.
Since generative AI models learn the patterns and structure of their input training data and then generate new data with similar characteristics, it is of equal importance to understand the role of human intelligence (HI) in how AI is applied.
“It becomes a matter of what humans will be doing once AI becomes more used in these funds. Traits such as creativity, empathy, judgement, and the ability to inspire others are very much the reserves of humans. It will be important for people to use more of their analytical skills and understand the narrative behind the data, which is increasingly important in a complex world,” Hall told AsianInvestor.
MULTIPLE PROVIDERS
WTW and Thinking Ahead Institute are seeing that larger asset owners have sizeable asset management teams in-house, including in the Asia-Pacific region. This provides them with the opportunity to develop in-house tools and proprietary models.
But when it comes to technology, Hall finds that this is seen as stackable. That means there is often a technological solution or platform that exists, and these asset owners are building on top of and developing that technology.
“Asset owners are buying from third-party providers, but they are customising the technology for their needs,” Hall said.
Jayne Bok, head of investments Asia at WTW, pointed out that asset owners are not reliant on a single data provider or a single source. They often use multiple systems fit for purpose to them.
A lot of the asset owners in Asia might have a human capital advantage with cheaper labour costs, but at the same time they have a huge governance disadvantage, as they are mostly public entities. That means their budgets are constrained, and their ability to invest in new areas of technology is lower.
“What that also means is that they will be more users of third-party systems. When I speak to asset owners in the region, they are using multiple sources, and the internal teams are basically developing frameworks to integrate third-party systems in a way that makes it cohesive and useful for their purposes,” Bok told AsianInvestor.
THE BIG PICTURE
For some asset owners, the delegation of various governance functions is crucial, so that they are able to focus on what is really important: meeting their end customers' needs. To stay in the game, the challenge is to take the mountain of data that exists in investment markets and turn it into decision-useful forms, Hall pointed out.
“Technology and AI are prime tools that can be used to do this, and we see many asset owners investing in improving their data analytics through delegation,” she said.
At abrdn, chief enterprise technology officer David Scott recognizes the opportunities that AI brings to the asset owners as well as the operation of the asset manager’s business. At the same time, a full understanding of the risks needs to be considered when exploring the technology.
“While it’s clear that these early iterations of AI tools can be incredibly useful as a starting point for what can often be labour-intensive tasks, freeing up time for more value-add activities, the world of generative AI moves on, and we continue to explore how we can continue to evolve our use of the technology for the benefit of our colleagues and clients,” Scott told AsianInvestor.
To implement AI, Hall pointed out that it will not be enough to hire someone with just an economics or finance background; the asset management industry will need to hire individuals who are able to grasp these bigger megatrends and view the asset management industry and the world surrounding it as complex adaptive systems.
“That ability to make connections and understand system behaviours — such as it’s about correlations and not just causations; that data is quite messy; that human behaviour matters — are critical. This is why we talk about the importance of T-shaped individuals — those with depth and breadth — and the importance of investment leaders investing in training on systems thinking,” Hall said.