Check out this survey – from “The Center for Audit Quality” and KRC Research – about how institutional investors are using AI to conduct research for investment decisions. Note that the survey focused just on investment decisions; not on voting decisions.
Here are 10 things we learned from the survey:
1. AI Is Now Mainstream in Investment Research – 68% of institutional investors report extensive or moderate use of AI in investment research and decision-making, including 26% using it extensively across multiple stages. Only 12% are aware of AI but not actively using it.
2. AI Adoption Is Poised to Accelerate – 83% expect their use of AI in investment research to increase over the next two years (42% significantly and 42% somewhat).
3. Proprietary AI Is Still Under Construction – Only 38% currently have proprietary AI tools, another 31% are developing them – and 23% plan to do so, meaning relatively few firms appear not use AI at all.
4. Proprietary vs. Third-Party AI Tool Use is Mixed – The market is divided among hybrid in-house/third-party tools (37%), primarily third-party tools (29%) and primarily in-house tools (26%).
5. How Investors Are Using AI to Read Corporate Disclosure – For company filings, the leading applications are:
– Extracting financial or operational metrics – 60%
– Summarizing MD&A and risk factors – 58%
– Comparing peer-company filings – 50%
– Identifying inconsistencies between narrative and financial information – 48%
– Detecting changes over time – 47%
– Synthesizing insights across multiple disclosures – 46%
– Identifying anomalies or red flags – 45%
6. Earnings Calls Are AI’s Favorite Hunting Ground – 60% regularly use AI to analyze earnings-call transcripts, followed by risk-assessment scenarios (49%), financial modeling and projections (46%), investment screening (45%), and 10-K/10-Q analysis (41%).
7. “Trust but Verify” Is the Governing Principle – 54% say they trust AI-generated insights but verify them, while 33% mostly or completely trust them. More importantly, 60% say AI informs investment decisions with human oversight; only 10% say AI plays a primary and directing role.
8. Efficiency Is AI’s Clearest Current Value Proposition – Investors give AI its highest marks for speed of analysis (80% high/very high value) and reducing manual workload (79%). They also see substantial value in identifying anomalies (68%), non-obvious patterns (64%), generating deeper insights (63%) and identifying important risks (62%).
9. Data Integrity Is the Big Red Flag – Not surprisingly, the leading concerns are:
– Hallucinations or incorrect outputs – 67%
– Biased or inaccurate information/data quality – 62%
– Lack of transparency about how outputs are generated – 60%
– Uncertainty about underlying data reliability – 59%
– Regulatory compliance – 45%
– Overreliance on AI – 45%
10. Investors Believe AI Is Already Improving Returns – 67% report that AI improved their firm’s investment performance over the prior year versus 20% reporting no meaningful impact – and only 3% reporting worsening performance. Among those reporting improvement, cited benefits include better investment decisions, faster data analysis, improved risk assessment and earlier identification of market trends.
Authored by
Broc Romanek