How AI is Shaping the Future of Investment Research
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Technology advances have transformed how fund managers make investment decisions in today’s modern financial markets, and you might be surprised at exactly how it’s played out. Today there is so much information available online, through intelligence platforms, and via quick (often immediate) digital communication that the obvious assumption is that decisions can be made more quickly and confidently than ever before.
But that’s not the case at all. Recent research has found that 89% of business leaders believe organizations are taking too long to make decisions — including their own. Tools and trends that may have emerged as ways to foster better decision-making are in fact causing it to take longer and be done with less confidence.
But you don’t have to get stuck in decision paralysis. There are technologies, best practices, and research methods you can harness to speed up your time to decision without sacrificing thoroughness. We’ll cover a few that we think are especially important here.
- Recent research has found more than 90% of senior business leaders feel time to decision is a critical success metric for organizations.
- Taking time to build context with traditional research and expert interviews can make the rest of the decision making process more efficient.
- Market intelligence platforms eliminate the need for manual source curation and provide access to thousands of sources and data points.
- Consistent, process-driven decision making can build confidence and speed over time.
What is “time to decision” and why is it important?
The formal definition for time to decision is exactly how it sounds: the amount of time it takes to get from initial consideration to final commitment to a decision.
It’s something that many organizations and managers struggle to shorten. Given the complexity of today’s business landscape and the sheer amount of information available, it’s no surprise that making timely decisions is a common challenge. But despite these widespread difficulties, nearly all business leaders — 92% according to recent research — believe that time to decision is a key success metric for organizations.
So where is the disconnect?
Well, it’s not that managers don’t know time to decision is important. Rather, it’s that there are numerous factors that exist within organizations that make it difficult to improve in this area.
It’s critical that organizations address time to decision issues because delayed decisions can directly impact efficiency, team performance, and ultimately revenue earned. In fact, faster decisions correlated with 16% higher annual revenues than slower counterparts.
For analysts and fund managers, slow decisions can easily result in missed investment opportunities and other losses that negatively impact a fund’s profitability. At the same time, risk is inherent in the investment world, and rushed or irresponsible decision making can have even more disastrous effects.
So how can you find the right balance between efficient time to decision and confidence that your research has been thorough? In the next section, we’ll go over 3 best practices you can implement to do it.
3 ways analysts and fund managers can improve time to decision
Start with context
It can be tempting to dive right into the specifics of one scenario when we’re making an investment decision. Perhaps a particular target company is performing exceptionally well, or a new market is opening up that seems urgent to enter.
As most analysts and fund managers know, it’s never a good idea to make decisions without the right information, and while it can feel time consuming, one of the ways to lay the foundation for smart decisions is with deep context. When you fully understand the companies, industries, and other factors impacting a decision, you’re better able to see how it will likely play out and ultimately benefit your organization.
Traditional research methods like reading financial and other historical documents, site visits, and following company news are all ways to gain context — especially with the right technology tools to curate sources and sort results (more on that next).
Another effective approach to building context for decision making is with expert interviews. These can be conducted by working with an expert network who connects you with experts from a particular company or field. These experts can provide firsthand insight into things like how a company has operated, industry nuanced, and likely trends for the future.
Here’s more on getting the most out of expert interviews:
How to get the most out of expert interviews. Five tips to help you succeed (video)
Expert insights like these can also be accessed through expert call transcript libraries (like Stream), searchable databases where you can search by expert name, industry, topic, company and more.
While gaining contextual knowledge can take time, these resources make it easier. Once context is built, the rest of your decision making process will be easier and more efficient.
Leverage technology tools
Technology tools driven by AI and machine learning have transformed investment research and market intelligence over the past several years. Without leveraging technology to do faster and more comprehensive research, analysts and fund managers are a step behind their competitors. They’re also making much slower decisions.
Investment research and market intelligence platforms curate thousands of sources and millions of data points into one central database. They utilize technologies like smart keyword search and sentiment analysis to quickly pinpoint the sources that will be most relevant and valuable to your research. They also allow analysts and fund managers to receive customized, automated alerts for specific topics, companies, and industries they need to know about (a great way to build context).
Leveraging a platform to support your research efforts completely eliminates so much of the manual research process that made decision making such a slow process in the past. Using an intelligence platform, you can make faster decisions while feeling confident in your supporting research.
Being process-driven can help you improve time to decision by creating consistency that fosters efficiency. It can ensure you don’t miss critical steps that later down the line could delay a decision. The first step to process-driven decision making is understanding the steps involved in making general business decisions.
Here’s a good visualization:
Knowing and sticking to this process avoids backtracking and empowers you to feel secure in where you are with your decision. Other things to consider: who else will be part of making this decision? Who is responsible for which steps in the research? What will be the communication method for making this decision (i.e. calls, meetings).
Formalize your processes as much as possible for confidence in your time to decision and, over time, improvement in its length.