Successful AI Use for Institutional Investors

As AI grows in sophistication and capability, industries are experiencing rapid transformation. What was once looked at with doubts and as a niche tool is now automating processes and enhancing decision-making for the better. However, the question of AI’s accuracy and effectiveness remains.  

Due to lingering questions of apprehension, investors and organizations are cautiously piloting AI integration. Investors and financial services professionals can leverage AI capabilities to enhance workflows, build models and projections, and gain access to unique insights, which is essential in volatile, dynamic markets. For this to happen, they first must understand the system, including how others in the field are currently using it, what capabilities it offers, and what strategic considerations are to maximize value.  

Leveraging AI Use in Institutional Investing  

Many large-scale investors are turning to AI to gain a competitive advantage in this complex market. Using AI offers several cost-efficient advantages that help decision-makers strategize and evaluate opportunities to meet portfolio and operational goals. Current applications include:  

Portfolio management 

Instructional investors can use AI to create or enhance tailored portfolios through asset allocation, quantitative strategies, and real-time rebalancing. 

Risk management 

AI can assist in detecting, predicting, and mitigating risks. By performing assessments and continuously evaluating market trends, predictive modeling, AI, and machine learning tools can help predict market, credit, liquidity, and operational risks. 

Operational efficiency 

Rather than being bogged down with monotonous tasks, AI can streamline efficiencies through document automation, reporting, and onboarding. By focusing on quick-win automation, investors can focus their time on higher-level strategies and operations.  

Deal sourcing and due diligence 

 AI is an agile tool that has the flexibility to help investors evaluate investment opportunities that adhere to their portfolio goals. These applications can aid in deal discovery, target scoring, due diligence automation, and ESG screening. Utilizing AI in this way allows investors to scale their strategies and leverage AI-powered insights.  

Deal projection and financial modeling 

AI enhances forecasting scale and model building. It can conduct scenario analysis to see how a deal performs under various economic conditions and analyze valuations and exit strategies based on historical data and trends. 

Common Challenges Investors Face When Implementing AI 

Although implementing AI offers substantial benefits, it's imperative to understand potential limitations. Due to the mixed adoption of AI, there are still many unknowns and concerns about governance. The leading AI tools, including foundation models, are getting more accurate and secure, but there are still limitations to easy implementations and consistency of output.  

Other obstacles stem from data quality and integration. As investors implement AI systems, it is imperative to have a strong, detailed plan for data governance that addresses everything from quality to regulatory compliance. By creating a strategy and an AI investment roadmap, investors can integrate systems effectively with minimum business interruption.  

Maximizing AI Adoption for a Competitive Advantage 

Using technology is necessary to remain competitive, making understanding and operating emerging technologies imperative. Without it, competitors that incorporate advanced technology will be able to outperform others through enhanced automation and decision-making. To find increased AI success, institutional investors should: 

• Focus on strategic integration to align AI initiatives with investment goals.  
• Invest in tools that emphasize transparency for more explainable AI, especially when building models or projections.  
• Continued learning to understand AI systems and updates to gain access to the most sophisticated, accurate results. 

The EisnerAmper Difference 

Advanced technology such as AI is not going away; this is just the beginning. Investors who take time to understand and strategically integrate AI will experience greater long-term success. With that, it can be challenging to know where to begin. With valuable leaders across service lines, such as global compliance and regulatory solutions, financial services, and AI, our teams work together to build and strengthen AI systems for maximized success. With an in-depth bench of knowledge and industry leaders, EisnerAmper strives to deliver high-quality services and maximize strategy for increased ROI. Learn how EisnerAmper can help you leverage AI for long-term success; contact us today.