The Enlightenment of the World’s Largest Asset Management Switching Fund Managers to Robots

AsiaIndustrial NetNews: I thought that artificial intelligence is just stuck in the boiling of public opinion, at most in the research and development stage of technology application orindustryrobotPipelining is the main operation. But I never thought that artificial intelligence can be said to have begun to be put into practical applications at a rapid pace. And it actually took the lead in spreading it out in the financial field. With the support of artificial intelligence technology, the rapid development of technology finance has greatly exceeded the expectations of all practitioners and professionals.

At the beginning of 2017, there was news that many insurance companies in Japan were laying off workers. The question is not how many are being laid off, but which department and who is being laid off? Many insurance companies in Japan are laying off employees in the claims department and personnel pushed by relatively senior personnel. The claims department is a department with high technical analysis content of insurance companies. The reason for this layoff is the use of artificial intelligence Robots to calculate claims business. That is to say, intelligent robots have entered the claims industry of insurance companies, replacing human claims analysts.

Just when people were dubious about artificial intelligence replacing the positions of financial securities and stock analysts, the world’s largest asset management company came true. BlackRock Inc, the world’s largest asset management company, announced on March 27, 2017 that it would restructure its active fund business, plan to cut a number of active fund managers and replace them with quantitative investment strategies. Under BlackRock’s restructuring plan, about 40 active fund staff will be laid off, including seven portfolio managers. This restructuring plan involves assets of US$30 billion, accounting for about 11% of the size of BlackRock’s active funds, of which US$6 billion will be merged into the group’s BlackRock Advantage Fund, which mainly uses computer and mathematical models to invest in quantitative investment strategies .

Technological finance came to us and entered the field of actual combat. Japan is the first to adopt artificial intelligence in the field of insurance claims, while the United States is the first to use robo-advisors in the field of asset securities and stocks.

Larry Fink, founder and CEO of BlackRock, put it well: “The democratization of information makes active investing harder and harder. We must change the ecosystem to rely more on big data. , artificial intelligence, quantification, and factors and models in traditional investment strategies.”

We know that investment advisors or various analysts in the financial market have always been the most senior and hottest talents, and they are also the most expensive talents. On the one hand, the salary cost of such talents is high, and on the other hand, the mobility is large and the competition is fierce. This has brought greater pressure to various asset management companies, fund companies, and securities companies. This is one of the reasons why some companies invest heavily in research and development of robo-advisors. Although the investment of intelligent robot investment consultants costs a lot in one-time research and development. But it can be said to be a once and for all. The overall accounting cost is much lower than that of human financial analysts and there is no trouble in loyalty and stability.

The world’s largest asset management company has taken the lead in adopting artificial intelligence investment advisors, which has played an exemplary role in the world. More and more asset managers will follow BlackRock and use artificial intelligence to replace fund managers, which is a disruptive event for the financial industry and capital markets. The rise of quantitative investing has further threatened the status of traditional fund managers on Wall Street.

More than Wall Street? The status of global stock financial analysts will be greatly threatened. Technological finance may be a trend and good news for financial companies, but it is definitely a nightmare for financial stock analysts. At the end of 2016, the White House released a document titled “Artificial Intelligence,automationAnd the economy” report, said that in the next ten years, about half of human jobs will be replaced by robots, from domestic workers to investment bank traders. First of all, the disruption in the financial field will be overwhelming.

On a deeper level, technological finance has also brought huge challenges to the entire capital market, monetary policy, and traditional financial securities and stock market supervision. One of the biggest risk points is that technology finance may make financial market risks more concentrated and amplify and promote its outbreak.

Once the robots used by industry giants such as BlackRock are rapidly popularized, investment banks and asset management companies have invested heavily in R&D and eventually use Robot investment advisers. Once the robo-advisor receives a sell order, it may trigger a A series of robo-advisers sold off, leading to a market crash. When the bots are selling and no one is buying, the crash will be especially tragic.

Regulators should wake up quickly at a time when tech finance is coming. Quickly, according to the characteristics of intelligent robot investment advisers, especially the risk points, start to make targeted regulatory policies to adapt to the new institutional arrangements of intelligent robot investment advisers. This is imminent!

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Published on 05/06/2023