Will AI Replace the Role of Portfolio Managers and Analysts?

AI is reshaping the financial services industry, sparking conversations about whether it might replace traditional roles, such as portfolio managers and analysts. While Generative AI adoption is accelerating — in Australia alone, it’s projected to add $48.9 billion to GDP by 2035 — it’s not a substitute for human expertise. 

So, is AI going to take your job? Probably not — here’s why.

Why Are Financial Services Firms Using AI? 

Financial services firms utilise AI in dynamic ways to improve products and services, tighten compliance and reduce risks. Here are some of the advantages AI brings to financial services operations:

• Productivity: Especially in terms of data processing and technology, traditional and Gen AI spike productive outputs. Summarising company results and broker research has never been easier.
• Risk reduction: AI can support risk management, legal and regulatory compliance through regtech solutions, and potentially  reduce operational risks through automation. 
• Customer experience: Whether through product development, servicing or sales and marketing, AI can contribute to a more personalised, streamlined customer experience. 
• Market expansion: While less pronounced than the above benefits, AI can facilitate expansion from a marketing and data perspective. 
• Competitive advantage: AI can boost a firm’s competitive advantage through development and operational initiatives, though this advantage is subtler than the likes of productivity and risk reduction.

How AI is Already Assisting in the Financial Services Industry

Gen AI adoption in the Australian financial services industry is currently at 30%. However, adoption is expected to more than double in the next year, with a projected 70% adoption rate. Here is how the technologies are put to practical use in the industry:

• For employee productivity: 
  
  • Internal chatbots.
  • Process automation.
  • Dealing with unstructured data.
• For business productivity:
  
  • Preparing documentation.
  • Automated call notes.
  • Automating quality assurance.
  • Scenario modelling.

For Portfolio Managers and analysts in particular, AI provides writing assistance, data analysis (to aid deeper insights and ideas generation), supports portfolio construction and optimisation and can help in scenario modelling.

Why AI is a Tool, Rather Than a Threat 

AI should be viewed as an assistant, not a competitor. It augments decision-making, efficiency and strategic thinking — but there are plenty of ways it relies on human expertise to ensure reliability and practical relevance, including:

• Need for human prompting and direction: AI bots need prompting. Experienced analysts are still necessary to provide the material for AI to analyse and guide its focus.
• Safety for experienced professionals: Sell-side analysts and experienced industry hands offer human input that AI cannot replicate. 
• Efficiency enhancement, but not a full replacement: The thinking behind AI adoption is to make workflows more efficient and provide digital assistance, not to eliminate roles.
• AI limitations: Companies are still cautious because generative AI can produce hallucinations or inaccurate information and results. This necessitates human oversight.

Using AI To Amplify Human Expertise

Despite growing adoption, AI is not positioned to replace portfolio managers or analysts. Experts must define the problems, guide analysis and validate outcomes, meaning AI is likely going to continue amplifying professional capabilities rather than eliminating them.

While AI can make your workflow more effective and efficient, it still can’t offer you genuine investment management solutions or legal support. For practical legal advice, get in touch with PMC Legal. 

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