Since the release of ChatGPT, the first user-friendly large language model, numerous
discussions have arisen regarding which professions will become redundant soon. Most
mentioned are junior positions, whether in software development, creative, or finance.
According to Bloomberg, since January 2023, entry-level positions have declined by roughly
35%, while the Fed’s data shows that almost 1 in 20 of recent college graduates are
unemployed, a figure that has been on the rise since April 2022.
Artificial intelligence excels at simple tasks, such as basic market and sector analysis,
comparisons, data extraction, and financial statement analysis. These tasks, often performed
by interns and junior analysts, can be done much quicker by various AI tools at negligible
costs and without much additional investment. Additionally, employing artificial intelligence
instead of people reduces the workload of more senior roles, which must oversee and mentor
the younger employees, as it allows them to learn more on their own while improving their
marginal productivity, which is a great cost-saving mechanism. In the same vein, AI allows
employees to take on broader or more complex responsibilities, as they can build on their
existing expertise much easier. Furthermore, it reduces the need for office space, healthcare,
and other costs associated with having employees, increasing the financial performance of the
company without much change in its operational capabilities. Due to these benefits of AI, we
will likely see the biggest increase in AI utilization in the largest corporations with extremely
bloated headcounts (think of bulge bracket banks and big four companies), where the savings
in time and money will be the biggest and will hurt upcoming finance graduates the most.
However, there are serious drawbacks related to the AI transition. The biggest problem is
confidentiality, as AI trains on your input to generate better answers for other users. This, in
turn, could lead to sensitive data leakages. To circumvent this, companies can create a local
version of a chosen model that is completely offline, but this is a technologically mighty task
to accomplish and maintain. Additionally, employees often use several different tools
simultaneously, which also bloats the storage and hardware needed for such a venture.
Furthermore, AI will never be able to take responsibility for its actions and outputs. While
juniors are interested in performing well, as it might lead to promotions, AI does not care
whether the answer it gives is correct and lacks the qualities needed to validate its own
output. While junior analysts might not possess the knowledge and authority needed to make
important decisions, they are able to critically analyze their own work and spot mistakes and
discrepancies before presenting their findings. Lastly, no tool is fully autonomous, and AI is
no exception. Someone must dedicate their time to prompt, adjust, and verify each output that
the tools produce. Therefore, in the end, it might be cheaper to have a junior analyst doing the
needed work rather than someone senior ensuring that AI is not hallucinating (in some cases,
AI hallucinates almost 80% of the time).
But the big question remains: Will junior roles in finance go extinct? Extremely unlikely.
Rather, we will see a drastic change in tasks that people in junior roles perform. Additionally,
we will likely see a shrinkage in the available junior roles, as they will be less focused on
technical skills and much more on employees’ ability to think critically and their
intrapersonal skills. Instead of spending countless hours collecting data, analysts will likely
focus on interpreting data, creating visualizations, and developing actual skills needed for
further career progression. In all these tasks, AI tools will become indispensable, as they will
serve as mentors, allowing juniors to learn quicker, better, and to keep up with the rapid pace
of the finance world. In the end, we will likely see much more efficient companies with teams made up of much stronger analysts who have the potential and skillset to make it big in the
finance world.
– Adomas Cvilikas
