The high stakes of message delivery and misinformation are not new phenomena.
Hessian Colonel Johann Rall was too busy to read an intel note from a British sympathizer during a Christmas party in 1776. The note warned of an imminent risk: George Washington’s march to Trenton, New Jersey.
In the early morning of April 15, 1912, Titanic senior wireless officer Jack Phillips’ string of passengers’ messages to friends and family, like “Weather delightful,” overshadowed his later calls for help.
[Sign up for stock news with our Invested newsletter.]
Fast forward more than a century, and authentic connectivity remains vital to effective communication. Artificial intelligence is now the go-to resource for adept business leaders who value efficiency and want their corporate marketing messages to reach the right audiences at the right time.
But as the tidal wave of AI potential washes over the financial world, concerns about data privacy as well as AI’s potential for widespread dissemination of misinformation are also rising.
AI’s Expanding Role in Communication
Liz Richardson, co-founder and chief revenue officer for the customer-engagement agency Captivate Collective, says, “We encourage our team members to be proactive in using AI to create efficiencies, increase the speed of research or facilitate brainstorming.” She adds, “AI is a game changer of a helper, but not a substitute for actual expertise. It’s a way to offload the mundane in order to double down in areas that really benefit from human touch.”
Grammarly’s 2024 State of Business Communication survey revealed that 52% of business leaders claimed increased efficiency by using generative AI. The survey also estimates that generative AI can help companies nationwide achieve aggregate productivity savings of $1.6 trillion annually.
A report from Deloitte Global, “Artificial Intelligence: The Next Frontier for Investment Management Firms,” suggests AI can help investment managers potentially generate alpha for clients, enhance operational efficiency, improve product and content distribution, and manage risk more effectively. The report adds, “AI equips firms with the tools to bolster compliance and risk management functions, augment and automate data analysis, and anticipate and manage ambiguous events.”
Sunil Reddy, head of growth equity and lead portfolio manager at Fiera Capital, says, “Just as previous technology waves like personal computers, cloud computing and smartphones spurred new applications that have changed our lives, artificial intelligence promises to do the same. We expect a decade of tremendous innovation in artificial intelligence.” The World Economic Forum estimates AI systems could add about $25.6 trillion annually to the global economy.
Misinformation and AI’s Influence on the Stock Market
Still, others are less sanguine about AI’s influence on the market in the coming years. Capital Economics, an economic research firm based in London, predicts that an AI-fueled market bubble will burst in 2026, for example. The firm argues that higher interest rates and an elevated inflation rate will eventually weaken equity prices.
Artificial intelligence also fuels many investors’ fears of misinformation. On May 20, for example, a foreboding AI-generated picture depicted smoke emanating from what appeared to be a government building near the Pentagon, creating jitters. Perhaps that’s why the World Economic Forum mentioned in January that misinformation (incorrect facts that unintentionally mislead) and disinformation (intentionally false statements) are now the world’s most severe short-term risks. In fact, false statements, particularly in cryptocurrency markets, have on occasion temporarily affected market activity and, as a result, investors.
AI has the capability to amplify the spreading of false narratives, including misleading statements about investment data that could conceivably affect the stock market. In addition, the unintentional generation of false information by AI is known as a “hallucination.”
It’s not a big stretch to imagine dire consequences from the efficient, widespread dissemination of investing-related misinformation. A study published in the Journal of Economics and Business in 2023 showed that “fake news” has had a short-term impact on both European and U.S. markets, with financial firms having more vulnerability to false information than non-financial firms. However, larger firms tended to be less affected by the dissemination of fake news.
Further, researchers found that negative false news items had significant, negative short-term effects on stock returns, while positive or neutral news items did not have a clear impact on returns.
Misinformation About the Use of AI
Then there’s the prospect of misinformation about the use of artificial intelligence itself. During a speech at Yale Law School in February, U.S. Securities and Exchange Commission Chair Gary Gensler said, “If the optimization function in an AI system is taking the interest of the platform into consideration ahead of the customer, that’s a problem.” Gensler said in a March video clip: “Think about it. Investment advisors or broker-dealers might want to tap into the excitement about AI by telling you that they’re using this new technology to help you get a better return. Public company execs, they might think that they will enhance their stock price by talking about their use of AI. Well, here at the SEC, we want to make sure that these folks are telling the truth.”
In July 2023, the SEC issued its “Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers” proposal, which seeks to abate any conflicts of interest linked to artificial intelligence. Several industry groups, including the National Association of Private Fund Managers, the Alternative Investment Management Association and the American Investment Council, oppose the SEC’s proposal and have asked the commission to withdraw the initiative.
As a safeguard, Josh Pantony, CEO and co-founder of Boosted.ai, suggests investment professionals take a measured approach to AI integration. Pantony comments, “Our take on AI is to be receptive but cautious. Look at the ‘AI-washing’ cases (issued) by the SEC. It has always been, and continues to be, important to ensure that what you’re investing in or paying attention to does the thing it says it does.”
The Public’s View of AI in Financial Planning
As an extra precaution, individual investors can verify an AI-generated financial plan with a financial planner, such as a CFP professional. An August 2023 survey conducted by the CFP Board revealed that 52% of consumers are comfortable with a collaborative approach with AI. Verification by a professional was the key to their acceptance, however.
Tejas Dessai, assistant vice president and research analyst at Global X, also sees value in a collaborative approach with AI. Dessai suggests, “Naturally, we expect a wide range of applications to emerge that transform the financial services profession as well. For example, in investment research, AI could take a first stab at understanding a market opportunity or in conducting due diligence and create an initial analysis for human review, saving countless analyst hours.”
AI’s capabilities and adoption will likely continue to expand over time. Its viability is too powerful to ignore. But whether AI connects authentically with consumers is, and will continue to be, the responsibility of its human facilitators.
More from U.S. News
Artificial Intelligence Stocks: The 10 Best AI Companies
Can You Invest in ChatGPT and OpenAI?
7 Top Investment Firms Using AI for Asset Management
Misinformation and the Stock Market: Will AI Raise the Risk to Investors? originally appeared on usnews.com
