Asset management may not immediately embrace technological innovation, but it will always adapt to it.
Cloud computing, big data and blockchain have proved highly influential this century, but artificial intelligence (AI) is truly revolutionary and is set to be as influential today as steam was 250 years ago.
AI doesn’t just transform the ways in which we conduct our day-to-day business. It is also reshaping the way institutional investors interact with their asset managers.
Our latest global research into the use of AI shows that the industry is experiencing increased levels of enquiries from clients about how they are using the technology.
More than two fifths (43%) of asset managers have been asked about how AI is deployed by between a quarter and a half of their clients. Another two fifths say that between 10% and 24% of their clients are asking how they use AI.
Unlike some of the recent backlash against the new technology, these queries are not founded in concerns about managers making use of AI. Instead, it is being prompted by clients who want reassurance that it is being used properly – and for their benefit.
Institutional investors are far more likely to invest in firms that have allocated a meaningful budget to AI research and implementation. In fact, more than a third (34%) of managers expect this trend to increase dramatically over the next three years, while fewer than one in 10 say it will remain at the same level.
Most asset managers (85%) said that their clients’ perception of AI is positive, with a further 10% saying it is very positive. While clients see the benefits that AI has to offer, they are also aware of the r isks. Data governance is the greatest area of concern to them, followed by automation and enterprise security.
Agentic AI – autonomous AI agents capable of handling complex tasks with minimal human intervention – has now become important to 91% of asset managers businesses, and critical to 2% of them.
Few asset managers admit to just keeping up with the competition (15%) while only 2% say they are falling behind. Most are confident that they are doing well compared with the competition – 71% say they are advanced in using AI, while more than one in 10 (13%) say they are more advanced what others – but they can’t all be right, can they?
There is no doubt where AI has had the greatest positive influence. Client engagement, automated client communication and reporting are head and shoulders above the rest, according to 42% of asset managers.
Though AI-powered support, Q&A, enhanced transparency and timeliness are each cited by 25% of managers, personalization at scale ranks near the bottom at just 6%. This is the most heavily promoted capability of AI marketing, but suggests the industry may be missing a trick, as it would likely boost levels of engagement and confidence considerably.
Every client is watching how their manager is using AI and that is not going to change. Data accuracy remains the foundation because clients want to know that managers’ analysis is accurate and that they can trust the advice they receive.
Firms that deliver this will be the ones leading the industry, while the ones providing them with the accurate data will become the power behind the throne.
Clearwater helps asset managers meet scrutiny with confidence. Clearwater AI embeds AI directly into the investment workflow, so teams can surface insights, ask questions of their data, and work more efficiently across complex portfolios.
For more on what clients expect from their managers’ use of AI, and what separates the firms getting measurable value from it, download the full report, GenAI and the Data Divide.