Work at top AM -- AI will virtually kill of entry-level roles in AM over the next 5yrs
I work at a large-well known AM (think T Rowe, D&C, etc) -- have spoken to multiple PMs and Sr. Analysts at my firm and vast majority believe that the associate role (main entry level role into asset management industry) will be largely killed off within 5yrs. The work of an associate (drafting earnings notes, collecting data, building models, drafting ESG reports, setting up calls, etc) will be mostly automated away within this period. Not to say 0 associates will exist, but expectation internally is that we will cut at least 80% of new associate positions by late 2020s (and these seats were few in number as it is). Our tech team is already working on tools to automate many of these tasks away partnering with LLM players
Arguably this is a benefit to Analysts who can now spend more of their time doing higher value-added work and analysis (vs. collecting data) -- though in 10+yrs and beyond even that role might be at risk, but hard to call this today. What is becoming increasingly clear is the sheer pace of innovation in this space astounding. I see tools today that can build world-class slide decks and even build some fairly complex models, not even a year after ChatGPT debuted. These tools will only get better.
I couldn't have known this before but now I'm regretting entering this industry at all. Nothing to really do here but try to pivot out, unless I can somehow push up to Analyst within the next 1-3yrs. All I can do now is share this information -- I would HIGHLY recommend against going into public equities and investment-grade public debt for new graduates. Private markets are going to be more resilient (though late-stage growth equity will also be pretty screwed for entry level folks so I'd go early stage of possible). I'm in the process of figuring out some backup plans atm
Opinions make markets, your opinion is bad.
Can’t stand different opinion and takes it personal. Classic associate who wasn’t cut out for the investment side. Has multiple accounts as well. Loser
Intern has an uninformed opinion that everyone MS's -- cries about how unfair it is and attacks OP because his dreams of becoming the 2nd Warren Buffet are going up in smoke
Great post. I'm not in the industry but it seems pretty clear that this would happen. The upkeep with technology across corporate America is becoming faster and faster by the day.
I'll say it again so people can call me crazy, in the next 50 - 100 years it will not matter what bank you did your stint at. In my ugly contrarian opinion, I believe our society is unfortunately returning to serfdom. There will be owners and there will be a serf class fighting amongst itself for their hopeful rise to autocracy. We're seeing the early signs of it with the top down ESG agenda from State and Blackrock. At the micro level it lends itself to the badge of morality with pronouns in the LinkedIn bio (public resume), the exuberance to which every action has become because of it's need for public attention via internet, the shrinking individuality and more herd like behavior. It's everywhere. And the fact that you read this and feel it, but choose to deny that inner feeling, is further proof there of.
Call me crazy ~
Don't completely disagree. However, I feel like 5 years might be a stretch - but could see this down the line.
To use these tools there needs to be a baseline of technological competence - think of how you have to learn to structure the prompts in ChatGPT to get a useful result. There are still some dinosaurs in PM/Analyst seats that haven't bothered to learn how to save an Excel file as a PDF...
In my experience, Analysts/PMs in AM are creatures of habit that are extremely engrained in their ways. Associates will likely be the ones that are able to learn how to use these new tools and integrate them into the Analyst's/PM's investment process in the medium term.
I understand where you come from on this but I'm not sure if I agree. I myself work as an associate at one of the firms you listed and I'm not sure that this will happen, and certainly not in such a quick time frame (I think you're at least over-estimating the operational quality of some of these large AM firms lol; I assure you that all by itself will keep the associate role around for over 5 years, even if all of the work for the role could be done by AI in 5 years).
Furthermore, I think the associate role will move in one of two directions:
1. Other low-value / low-impact work that analysts will be able to delegate.
What kind of work could this be? I'm not totally sure, but I assure you that there is generally lots of mundane work to do at the senior level that has not yet frequently been delegated. Even basic things like writing and posting trip reports, alternative data "asks", among many other things (ESG reports certainly being one good example) will change, be amended, or be added to. This type of lower-value work in my opinion seems to just grow like a weed and I can't imagine ChatGPT or AI will kill all of it.
Again, for this point, do not over-estimate operational quality here. That all by itself alone will assure that the above isn't automated too quickly.
2. Higher-value work on securities / ideas / macro-level work / alternative data projects that analysts don't have the time and effort for
As we have seen with the introduction of AI and operational technological changes in the past, other lower-value work gets displaced with higher value work among a similar set of persons. Analysts mostly have a specific area of work and there is a lot that they cannot cover. Although some associates might argue that they have trouble finding what this "higher-impact" work is because they are not delegated it by their directors (while at least initially, analysts might be delegated companies or an area to look at), there is certainly at least more companies, if not more macro-level or more channel checking that these associates can do that analysts simply do not have the time for.
I'm curious what your thoughts are on these two topics. Do you think that these two areas will just be eliminated and more will be placed on analysts? Or maybe they eliminate the associate role and hire a few more analysts? Or maybe these companies decide to move away from growth and toward cash generation and focus heavily on operational savings? I'm not sure if any of those will happen, but curious if you think they will.
Tech based Creative Destruction is agnostic to industry. There will likely be many changes in most industries as future iterations of AI make more possible. That said, this is nothing new. Every generation has had to deal with it in some form. You can go back to fire, the wheel, electricity, autos, the mainframe, yada yada yada. This feels like it will be further and faster (and may be). However, all the more reason to be a value creator. Become that person in your department who is viewed as invaluable. Doesn't matter what the role, take on more responsibility, get mentored, become a mentor, be a team player / solution provider, etc. That's the way to build a personal moat around your career.