Generative artificial intelligence will revolutionize the asset management industry and produce better long-term outcomes for clients, Vanguard Group CEO Mortimer J. "Tim" Buckley said Wednesday.
"What we're suddenly discovering with generative AI there are a lot of cognitive things that we do that are actually fairly routine," Mr. Buckley said at the Investment Company Institute Leadership Summit in Washington. "So you're going to go through this revolution of suddenly all those routine cognitive tasks, those will be automated."
He referred to this moment in time as an "inflection point for our business, for all businesses" and likened AI's potential impact to the internet. He said Vanguard's assets under management, which were $7.2 trillion as of Dec. 31, are roughly 14 times larger than they were in the early 2000s, but the firm has not doubled its employee head count over that time. That's because administrative tasks have been automated, which "changed how you served clients, it changed your cost structure," he added.
While many routine tasks have already been automated in the past 20 years, Mr. Buckley, who didn't specify how Vanguard utilizes AI, said generative AI will impact routine cognitive tasks.
Mr. Buckley said he asked a Vanguard fixed-income portfolio manager about how generative AI could impact the business and was told that instead of spending time conducting research or on other tasks, employees would have newfound time to focus on more important projects. "We move up the value chain to higher-order thinking," Mr. Buckley said.
He added, "So this is this revolution: As we move along, we will change our jobs, we'll change what we do, and we'll move up to that higher-order thinking (adding) more and more value for our clients. So we embrace it."