The evolving role of AI in the finance sector

A recent survey conducted by Kaplan Schweser has shed light on the evolving role of artificial intelligence (AI) in the finance sector, particularly among chartered financial analysts (CFAs). The “2024 CFA Program Survey,” which included responses from 728 CFA Level I, II, and III candidates and charterholders across the United States, Canada, the United Kingdom, Germany, Switzerland, and France, revealed that a majority of those surveyed—over two-thirds—believed AI will enhance their professional capabilities in the future.

While the survey highlighted a generally positive outlook towards AI, it also underscored a spectrum of sentiments within the finance and investment sectors. An earlier CFA Institute survey involving 200 investment industry representatives reflected more ambivalence. In that study, 68% of respondents indicated their workforce was curious about AI, while 60% expressed anxiety towards its implications, and 48% reported a degree of resistance.

CFA charterholders, who frequently occupy roles in portfolio management and research, are finding practical applications for AI that enhance their productivity. Noah Damsky, a principal at Marina Wealth Advisors based in Los Angeles, described how AI has significantly streamlined his daily tasks: “Research analysts can spend the majority of their day reading reports and listening to conference calls, and part of these responsibilities have been impacted by AI,” he noted. Damsky specifically highlighted the use of AI to summarise critical economic indicators from conference call transcripts that previously consumed substantial analyst time.

Michael Carbone, a CFA and financial advisor at Eppolito Financial Strategies in Massachusetts, echoed similar sentiments, stating, “For starters, it saves me a lot of time.” He employs AI to double-check information, summarise complex research, and identify biases, among other tasks. Similarly, Mike Kern, a CPA and founder of FreeBudget, acknowledged the material impact AI has had on his daily productivity, citing its utility in large data analysis and improving communication.

In Oregon, financial planner Joe Bautista is leveraging AI technologies to enhance his advisory services. He is utilising the Ollama large language model (LLM) and Python to process basketball data to generate insights and predictions, which he integrates into his financial newsletter, “The Smart Play.” Bautista detailed his intention to apply AI for a broader range of tasks, such as providing tailored feedback on spending habits and retirement forecasts, minimising time spent on data analysis and maximising his client engagement.

Despite the enthusiasm for the potential of AI, industry professionals also emphasised the technology’s limitations. Damsky outlined that while AI adds significant value in terms of data synthesis, it lacks reliability in analytical tasks, which he believes are crucial for professional success. Carbone added that AI, though revolutionary, has the potential to reshape labour markets and exacerbate existing skills disparities, necessitating conscious efforts to mitigate job displacement.

Kern expressed a belief that AI will transform the accounting and finance industries significantly over the next decade, potentially rendering many traditional roles obsolete. He cautioned that businesses and professionals who resist adopting AI stand to fall behind, comparing the situation to the resistance faced by the internet in its early days: “It is adapt or die in business,” he said.

Amid these challenges, there exists optimism regarding the future of AI in finance. Carbone noted that despite operational uncertainties, he has witnessed substantial improvements in AI capabilities since its inception, though he remains cautious about the gaps in understanding surrounding the technology.

As the finance industry continues to navigate the integration of AI technologies, it is clear that while the potential benefits are substantial, careful consideration of the associated challenges will be essential for sustaining professional growth and client trust in an increasingly automated landscape.

Source: Noah Wire Services