As the industry contemplates how to incorporate artificial intelligence into their operations, Alex Ambroz, CEO of the Allocator Training Institute, says that while AI may be here to stay, allocators may still have some misconceptions about what it can and cannot do.
“There have been some senior leaders of AI firms saying that this will replace 50 percent of jobs, which in my opinion is 100 percent absurd,” Ambroz told Institutional Investor over video in April.
Like most companies, organizations, and governments, big investors see promise in artificial intelligence to help them with everything from investment performance and operational efficiency to risk management. New internal data show that most LPs think AI is the future as they admit their investment models are obsolete and spend too much time on repetitive work. And as II reported earlier this year, the real obstacle is not just the technology, it is the institutional structure of asset owners themselves.
While AI tools are increasingly effective for investors, they will never replace an investment staff, according to Ambroz.
“Imagine that future space where that can happen. Great. We're maybe three years away from getting that,” he said. “But how is that going to change the need to hire someone? Who's going to actually manage and oversee that? Who's going to make decisions?” Ambroz dismissed the idea of outsourcing investment decisions to a chatbot as absurd.
“If an intelligent 8th grader can do some part of your job, well, we should probably outsource it to an intelligent 8th grader,” he added.
Ambroz argues that while AI tools like large language models will become the price of admission, it won’t eliminate the need for investment staff. He compares LLMs to software like Microsoft Excel, which was supposed to eliminate accounting jobs (but clearly did not).
“No one's ever hired me because I can use Excel. That's not the reason any of us have a job in the asset owner industry,” he said. “It's our ability to synthesize analysis across a spectrum of experience, intuition, relationships, and knowledge.”
AI Will Add Efficiency, But Won’t Add Leisure Time
While AI will “change our lives and eventually won't make mistakes,” Ambroz caveated that this doesn't mean employees will work fewer hours because they have this tool. “I think there is this misbelief, just like there has been for hundreds of years, that each technological advancement will mean that we get to now live in a life of leisure,” he said. “But that's never going to happen.”
He added: “We can do more, but because we can do it more efficiently, in a capitalist society, that does not mean people get to leave early at the end of the day; that just means we can get more done during the day.”
