Artificial intelligence is becoming increasingly embedded within the investment management industry, but new research from Clearwater Analytics suggests fund managers remain divided over how much they should be spending on the technology.
Research from Clearwater Analytics found that while AI investment is rising rapidly across the sector, there is little agreement on what constitutes an appropriate level of expenditure.
Two-thirds (66%) of fund managers surveyed said they worry their firms may be over-investing in AI, while a quarter (25%) believe their organisations are not investing enough.
The findings come despite a significant increase in AI budgets. Nearly two-thirds (63%) of firms reported increasing AI spending by more than 50% over the past 12 months, with no respondents reporting a reduction in investment.
For advisers and paraplanners carrying out due diligence on investment providers, the research highlights how AI is becoming an established part of many managers’ investment processes.
AI adoption already well established
The study suggests asset management is well beyond the experimental stage of AI adoption. More than half (56%) of respondents said their firms began integrating AI four to five years ago, while a further 34% started between two and three years ago. Just 9% have adopted the technology within the last year.
This indicates that many firms are now focused less on whether to use AI and more on demonstrating value from their investment.
Playing a bigger role in fund management
AI is also becoming more closely integrated into fund management activity.
According to the research, 43% of fund managers use AI in between 25% and 49% of their investment decision-making processes, while 10% rely on it for the majority of investment decisions.
Its use is also expanding within risk functions and operational teams, where firms are using it to analyse data and automate manual tasks.
Although portfolio managers remain responsible for investment decisions, the findings suggest AI is becoming a more influential tool within the investment process.
Attention shifts to outcomes
As AI adoption matures, attention is turning to whether growing investment is delivering measurable benefits.
The concern among fund managers that spending could be running ahead of results reflects the challenge many firms face when assessing the return on AI projects.
While organisations appear committed to increasing investment, questions remain over which initiatives add genuine value.
The research suggests AI is now firmly embedded within asset management. However, while firms appear united on the need to invest, they remain far less certain about how much spending is required to achieve meaningful results.
Commenting on the research, Souvik Das, Chief Technology Officer at Clearwater Analytics, said the industry is now grappling with how best to translate AI investment into tangible benefits.
“Increasing the budget is the easy part,” he said. “The harder challenge is institutionalising AI in a way that drives genuine alpha and operational excellence, rather than simply adding cost and complexity.”
For paraplanners researching investment providers, the findings highlight the growing role AI is playing behind the scenes in fund management businesses.
While firms differ on how much they should be investing, the technology is becoming an increasingly established part of the investment process
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