Manager Focus on Staff Cuts Threatens Success of AI Programs
Asset managers’ artificial intelligence programs will increase the demand for employees with expertise and skills that certain AI tools lack. But some firms are getting rid of the very employees who can integrate these tools successfully, as part of ill-conceived cost-cutting exercises, executives and consultants said.
AI is not a “headcount story. It is a capability story,” Pat Conroy, a vice president of global business development at STP Investment Services, told FundFire via email. “Most firms are about to learn the difference the hard way,” particularly as innovation overtakes efficiency as a strategic priority, and Gen and agentic AI are incorporated into front-office processes, he said.
“The firms that cut their way to an AI future are already feeling the cost of that decision,” Conroy said. “Redesigned production models do not need fewer skilled people. They need different ones.”
Roles that require “high volume, low-judgment production work” are being displaced, but those positions were already being eliminated through outsourcing and offshoring before this “AI cycle began,” Conroy told FundFire.
Managers will require employees with “deep domain expertise,” such as a portfolio operations professionals who understand performance attribution, valuation methodology and compliance workflows at an “expert level,” he added.
“That person becomes the orchestrator of governed autonomous execution,” Conroy said. “They know when the model is wrong. They translate probabilistic outputs into defensible regulatory evidence. They own the accountability when examiners arrive – you cannot manufacture that capability. It takes years to develop, and the market for it is tightening precisely because AI is raising the stakes of getting it wrong.”
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