In our recent live event "Enabling Better Investment Outcomes With AI," industry experts Peter Zangari, Partner & Head of Americas at MDOTM Ltd, Aron D. Kershner, Managing Director at Goldman Sachs AM, and Andrew Hardy CFA, Director of Investment Management at Momentum Global IM, commented on the current industry challenges institutional investors are facing, the opportunities brought by technology, especially AI, and offered valuable insights on the integration of AI in the investment process.
In particular, Aron from Goldman Sachs AM shared insights on how the industry has evolved over the years and how clients’ needs and expectations have shifted towards more personalised and scalable solutions that can add speed and efficiency to the investment process. Andrew and Peter, on the other hand, discussed how the investment process benefits from AI integration, emphasising the importance of balancing traditional practices with technological adaptation and highlighting specific use cases of AI in investment strategies.
Challenges and Opportunities of Integrating AI in Asset and Wealth Management
The field of asset and wealth management is currently undergoing a significant transformation driven by rapid technological advancements, evolving regulations, and changing client expectations. These shifts present both opportunities and challenges for investment professionals, necessitating agility and innovation to maintain competitiveness.
The growing demand of clients for transparency and personalization in investment solutions is directly linked to the interplay between industry challenges and client expectations. As the investment environment continues to evolve, so too do the expectations of clients, highlighting the importance of a client-focused approach in all investment decision-making processes. This approach is essential for aligning investment strategies with individual client goals and preferences.
Personalization is present in all these aspects of our life. And so, we see and expect naturally that investors and clients are going to start to demand that from their investment portfolios
Aron Kershner, Managing Director at Goldman Sachs Asset Management
The Role of AI in Meeting Clients' Needs
Peter from MDOTM emphasised the crucial role of AI in adapting to clients' evolving needs and expectations.
Artificial intelligence is a powerful technology that helps asset & wealth managers raise assets efficiently and productively
Peter elaborated on how Analytical and Generative AI could work together to address the evolving needs of clients. Analytical AI enables asset and wealth managers to process vast amounts of data quickly and efficiently, offering data-driven and clear insights into complex market dynamics. In contrast, Generative AI takes the complex outputs from Analytical AI and transforms them into clear, easily understandable commentaries, autonomously providing detailed insights on clients’ portfolios. This functionality is essential for both the explainability and transparency of investment decision-making.
The effective integration of AI, combined with human expertise, significantly enhances performance, communication, and research in investment management, aligning technology with strategic business objectives to meet client demands effectively
Peter commented.
How MDOTM's AI Empowers Institutional investors Investment Process
Momentum Global Investment Management has been leveraging MDOTM's AI for years, and during the live Andrew commented on how it has significantly enhanced the investment processes by streamlining operations and augmenting both speed and scale to portfolio construction. Over the past 18 months, Momentum has used Sphere, MDOTM’s proprietary AI platform, to navigate today’s complex financial landscape. Sphere efficiently assimilates and analyses vast amounts of economic and fundamental data across a wide spectrum of asset classes and securities, providing Momentum with an information ratio advantage - achieving better returns with lower risk.
MDOTM’s proprietary Analytical AI offers data-driven insights beyond the natural observations of the investment team and suggests optimal asset allocations based on different risk parameters. Sphere not only augments the analytical capabilities of the team but also introduces a new dimension of unbiased, transparent analysis that complements traditional human expertise.
We like to think of AI as a different analyst sitting over there introducing a different view. AI is less emotional and it's arguably more transparent than people’s minds.
Andrew commented.
Moving Forward with AI in Investments
Today’s need for technological advancements leads to a future where AI-driven investment solutions are not just a choice but a necessity to have a competitive edge in the investment industry. This approach empowers investors to make informed decisions, optimise portfolios, and thrive in an ever-evolving landscape. As the financial industry continues to evolve, the partnership between Generative and Analytical AI will play a pivotal role in ensuring AI's maturity, explainability, and effectiveness in investment management.
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