Stableford Capital Insights

How to Leverage the Artificial Intelligence Disruption to Help Investment Opportunities

There is a time and a place for leveraging artificial intelligence disruption: now and in your portfolio management. While many see the coming wave of AI — computers making decisions and automating tasks — as a force to be reckoned with, there is no doubt it presents an investment opportunity for those who are prepared.

Investing Alongside Artificial Intelligence Disruption

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The artificial intelligence disruption is here, whether or not people are ready for it. For the workforce, this means new tech jobs are being created, while as many as 54% of other jobs could be automated. For the financial industry, this means jobs may be partially done by AI, leaving finance professionals to handle the more nuanced aspects of the work. Intuition cannot be programmed, nor can creativity; two traits desirable in innovative asset managers and financial advisors.Many basic tasks that may have taken up a financial advisor’s time before can now be automated. What the calculator once did for basic math, AI can do for investment opportunities. Given the “time is money” aspect of the business, this undoubtedly saves firms on both fronts.Another AI benefit to the financial industry is in decision making. Algorithms should remove personal blind spots and provide only objective answers to a question while being faster and more accurate. This can assist with lending and risk management. So much of investing is trying to be 10 steps ahead in a financial game of chess. With predictive AI, those 10 steps are more predictable and achievable.

Robot Speak

Instead of fearing a robot rebellion, forward thinkers are learning the language surrounding artificial intelligence to be better able to

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incorporate these technologies in their business or investment strategies. For those considering using some artificial intelligence strategies in the investment world, there are a few keywords to learn:

  • Robotic Process Automation: computers “watch and learn” a task, then repeat it as needed.
  • Robo Advisors: financial companies that use algorithms to balance portfolios without instruction; may not be as accurate as a knowledgeable investor.
  • Machine Learning: when algorithms can absorb and use new information without being told more instructions; self-teaching computers.
  • Data Analytics: collecting information from users and looking for trends that can help predict outcomes, needs, and opportunities.

The greatest benefit of getting familiar with or using these new technologies in finance is being able to deal with large amounts of data in a reasonable time frame. Machines will always be able to process more information than human minds, so when working alongside a human counterpart that information can be used to find the best possible investment opportunity.

Pitfalls of AI

AI, despite what some researchers and sci-fi movie directors might say, cannot solve all problems. In fact, it might even cause some new ones. Bias can, unfortunately, be coded into complex AI decision-making. This can result in what may produce risk-conscious results that appear socially discriminatory.Automation is a hot topic when it comes to AI, and it has implications in the financial industry, as well. Where some things may be considered “streamlined,” they may also be forcing jobs out of the industry, and advisors with them.Security risks are also significant, as so much personal and financial information is documented together within the AI systems. Added security measures may be necessary to further protect vulnerable client data.

Get in Front of Artificial Intelligence Disruption

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While the benefits and risks must be weighed with caution, it is clear that artificial intelligence has paved the way for some interesting opportunities and implementation can be leveraged to the benefit of financial professionals and investors. Doing so can provide more accurate information in portfolio management while also saving the financial professional’s time and the investor’s hard-earned money. As with any new technology, getting in front of the artificial intelligence disruption is the best way to benefit from AI in finance.To learn more about how Stableford Capital uses artificial intelligence in its strategies, and how we can leverage the artificial intelligence disruption in your financial plan, contact us online or call 480.493.2300.

Andrew Brinkman
Andrew J. Brinkman is the Founder of Stableford Capital. Over the course of his 45+ year career, he built A.J. Brinkman & Co., a leading foreign exchange arbitrageur and institutional floor broker, was a managing partner of Petros Capital, a long/ short institutional hedge fund and, for the past ten years, he has been a discretionary asset manager for high net-worth families. Andrew Brinkman has been a member of the Chicago Mercantile Exchange, the New York Futures Exchange, and the Chicago Board of Trade. A 1978 graduate of Cornell College with degrees in Economics and Political Science, he was a board member for ChildHelp USA, a board member of the Berry Center for Economics, and former trustee of Cornell College.