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Increasing use of AI in investment management poses new ethical challenges for firms and professionals. This paper examines good ethical practices for the design, development, and deployment of AI in investment processes.


Ethics and Artificial Intelligence in Investment Management: A Framework for Professionals (PDF)

Ethics and Artificial Intelligence

Overview

The use of artificial intelligence (AI) in investment management is rapidly increasing, posing both opportunities and challenges—including ethical challenges—for firms and professionals working to adopt these technologies in investment processes. This paper addresses the ethical considerations of using AI in investment management. It is designed to inform investment professionals and firms on the spectrum of issues brought about by the use of AI tools and big data in investing. It thereby aims to advance and motivate the evolution of ethical practices in the development of AI technologies. AI adoption offers significant potential benefits, yet it also entails several risks. Instilling an ethical framework in the design, development, and deployment of AI is critical to ensure that the applications firms deploy serve the best interest of clients.

Ethical considerations span the AI workflow, and this paper sets out questions for professionals to evaluate at each step via an ethical decision framework. It combines fundamental ethical principles with the applicability of relevant professional standards. In addition to an ethical framework, the organization’s senior leadership must establish (i) a culture conducive to client-centric AI innovation and collaboration, (ii) a robust risk management and governance framework, and (iii) a talent development programme to ensure teams possess the appropriate knowledge, skills, and abilities. Taken together, these elements provide the most supportive environment for AI to be successfully used in the investment context.

About the Author(s)

Rhodri Preece
Rhodri G. Preece CFA

Rhodri Preece is Senior Head, Research for CFA Institute and is responsible for leading the organization’s global research activities and publications, managing the research staff and collaborating with leading investment practitioners and academics. CFA Institute produces the highest-calibre research on issues and topics most relevant to the investment industry, including rigorous in-depth research, forward-looking thought leadership content, applied investment insights, and commentary on trending investment topics.
Rhodri previously served as head of capital markets policy EMEA at CFA Institute, where he was responsible for leading capital markets policy activities in the Europe, Middle East and Africa region, including content development and policy engagement.
Mr Preece is a current member of the PRI Academic Network Advisory Committee, and a former member (2014-2018) of the Group of Economic Advisers of the European Securities and Markets Authority (ESMA) Committee on Economic and Markets Analysis.
Prior to joining CFA Institute, Mr. Preece was a manager at PricewaterhouseCoopers LLP in the investment funds group (2002-2008). He has a BSc and a MSc in Economics and is a CFA charterholder since 2006.