Burgers, Beer, and Brainy Bots: AI Takes Center Stage at July 4 Cookouts with Financial Pros

Artificial intelligence (AI) and the risk of a recession are expected to be hot topics of discussion among financial professionals and investors during July 4 cookouts and similar gatherings, according to Markets live pulse survey by Bloomberg. The survey reveals that around 40 per cent of professional investors and 30 per cent of retail investors anticipate AI-related conversations to take place alongside burgers and beer. While AI’s impact on the influx of funds into tech stocks is widely acknowledged, it is also seen as a disruptive force in the wealth management industry. Clients, especially younger investors, perceive AI as a useful tool rather than an adversary, emphasising the need for adaptability and embracing change.

AI’s Disruption in Wealth Management

Bloomberg cited Financial planner Kassi Fetters of Artica Financial Services in Anchorage, Alaska, who notes that clients often initiate discussions about AI in relation to their financial matters. The wealth management industry is increasingly being influenced by AI-driven technologies, prompting professionals to embrace constant adaptation, learning, and change. The younger generation of investors sees AI as an additional tool to enhance financial decision-making rather than a threat.

Recession Concerns at July 4 Gatherings

The Bloomberg survey also highlights the possibility of recession discussions during July 4 festivities worldwide. However, approximately 48 per cent of retail investors and 39 per cent of professionals expressed a strong desire to avoid any conversation related to finances during family get-togethers, indicating a cautious approach to sensitive economic topics.

Increasing Savings Amid Job Cuts

The ongoing wave of job cuts within the financial industry has led to a higher percentage of professional investors than retail investors prioritising savings. The Bloomberg survey reveals that 54 per cent of professionals expect to save more in 2023 compared to the previous year, while 43 per cent of non-finance respondents share the same sentiment. Both professional and retail investors display similar strategies, with nearly a third of both groups preferring to invest in ‘safe’ assets such as savings accounts, certificates of deposit (CDs), and money market funds.

Growing Cash Reserves and Investment Approaches

Investors have already allocated significant amounts of cash to money market funds, with assets reaching $5.4 trillion as of June 28, compared to $4.5 trillion in the same period the previous year. The most popular investment approach among professionals (48 per cent) and retail investors (53 per cent) is a balanced 60/40 portfolio, splitting funds between safe assets and riskier options like stocks and alternatives. Furthermore, 56 per cent of professionals and 58 per cent of retail investors anticipate their investment portfolios to outpace inflation this year, with expectations centered around actual, inflation-adjusted returns from stocks.

Diverse Investment Strategies and Focus on Mental Health

Among the comments provided by survey respondents cited by Bloomberg, gold and profits from options trading received multiple mentions. However, one participant highlighted the returns gained from ‘contentment’ as a means to surpass inflation. While some investors are adopting defensive measures by curbing everyday expenses in preparation for a potential recession, others are patiently waiting in treasuries to seize opportunities in distressed real estate or keeping a cash reserve for opportunistic deployments. Interestingly, one respondent focused on personal well-being, emphasising the importance of mental health and resilience, which AI-driven applications in the future could support

(With Inputs from Bloomberg)