Combining AI capabilities with human judgement, insight and wisdom will create a sustainable and competitive advantage for asset management boutiques, says the Group of Boutique Asset Managers (GBAM).
Speaking at their annual international conference in Florence on Friday, members of GBAM agreed that while data quality and organisational readiness were critical success factors in the adoption of artificial intelligence, AI alone would not deliver competitive advantage.
The group agreed that the rapid development and adoption of AI capabilities will automate existing processes across the business and was already delivering meaningful benefits in research, software development, marketing, and operational functions. Transformational changes that combine processes with new insight will be harder to come by.
But real competitive advantage will only come when the power of AI is combined with uniquely human qualities such as judgement, experience, insight, and wisdom.
“The one thing we know of our ability is that it is based on superior judgement. That’s what we bring to the party. It’s judgement; it’s the ability to find context in things that can’t be easily read as right or wrong,” said GBAM chairman, Tim Warrington, former Chairman and CEO OF SKAGEN, and Executive Director at Storebrand AM.
Delegates heard numerous examples of AI improving business processes, including investment research, coding, marketing communications, client reporting, and operational workflows. However, they noted that many of these benefits would become widely available across the industry, reducing the scope for firms to gain a lasting advantage from technology alone.
A recurring theme throughout the discussions was that AI is likely to become a utility available to almost every investment firm. As a result, the differentiating factor will increasingly be the quality of human decision-making, interpretation and stewardship applied alongside the technology.
“We’re all going to get similar levels of AI collaboration, eventually. So, what is it that you’re going to do with your people, or focus on, to really succeed with AI in a way that other firms can’t?” said Warrington.
Conference members agreed that boutique firms are particularly well placed to benefit from this evolution because their investment processes are typically built around specialist expertise, independent thinking, and close client relationships.
The conference concluded that while AI will undoubtedly become a core component of asset management businesses, the firms best positioned for long-term success will be those that combine technological capability with the uniquely human qualities of judgement, insight and wisdom
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