The global asset management industry, now overseeing nearly $120 trillion, faces mounting pressures, including rising costs and growing investor preference for low-fee, passively managed funds. With market appreciation and other revenue drivers expected to slow, firms must rethink their strategies to sustain growth. BCG, in their 2024 annual asset management report, AI and the Next Wave of Transformation, suggests a threefold strategy they call “The Three P’s”—boosting productivity, personalizing client engagement, and expanding into private markets—as the optimal path forward. And integrating artificial intelligence (AI) can enhance these approaches: AI drives productivity with data-driven decision-making, enables scalable personalization, and enhances private market information/risk analysis.
Boosting Productivity: The report details several examples of how use of AI can help create significant productivity gains—particularly in Sales and Marketing (development of marketing content, analyzing public data on prospective marketing leads, increasing conversion efficiency), and Investment Management and Trade Execution (efficient gathering, synthesizing and analyzing of data).
Enabling Greater Personalization: AI is revolutionizing personalization in asset management by enabling scalable, customized portfolios and enhancing the customer experience. For instance, asset managers can integrate thematic preferences directly into portfolios, such as reducing exposure to sectors like oil and gas. And using these tools to meet specific client goals at scale allows for personalized portfolio management beyond ultra-high-net-worth clients. AI can help businesses better understand their customers and reach out to them proactively, like identifying customers who might be unhappy during big changes. By increasing advisor effectiveness, AI can also help determine optimal client focuses, aiding retention and reducing less efficient indirect sales efforts.
Unlocking Private Markets Potential: AI is boosting deal team efficiency and enhancing decision-making. In due diligence, AI can cut preparation time by an estimated 30 percent through data synthesis, enabling teams to concentrate on strategic analysis. For private equity and venture capital, AI creates value by aiding portfolio companies, especially in AI-disrupted industries like biotech, where it is increasing the pace of product innovation in opening efficient pathways to create new compounds. Private-market players can also benefit from scaling successful AI use cases across multiple companies, promoting cross-company learning and efficiency.
Industry surveys show widespread optimism about AI’s potential, with many asset managers planning or already implementing generative AI use cases.
Yet, while AI can often outperform humans in predicting earnings or providing rule-based investment advice, many clients expect more than efficient accuracy—they still seek advisors who understand their goals and values. The best asset managers will not lose the critical understanding that many of their clients still value a personal connection.