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A new report stays that the US retirement industry is beginning to examine its relationship with artificial intelligence (AI) especially on how it can integrate new functionality in the coming years in the back office, according to the latest Cerulli Edge—U.S. Retirement Edition.

This could be key for back and middle office operations staff in investment and fund management over the next few years as the industry begins to look at more way to integrate AI.

Research institute Cerulli Associates said that its found that “some forms of AI are already integrated into at least one area of defined contribution (DC) plan management and have the potential to ease back-office operations”.

According to the report, which included a survey of defined contribution investment-only (DCIO) asset managers, 16% anticipated that AI’s impact on legal document summaries will be ‘significantly positive,’ with 23% expecting it to be ‘moderately positive’ and another 23% expecting it to be ‘slightly positive.’

The rapid adoption of AI in some industries and more hesitant adoption in other has been noted over the past few years, even among the pensions and investment industry where certain segments or companies have raced ahead.

Last year at the Fund Operator Summit | Europe in London Calum Chace, author of “Surviving AI” and Chief Marketing Officer at Conscium told the audience that “Change has never again been so fast but will never again be so slow” – when he gave the opening keynote presentation on the topic of the changes the fund management world needs to make to be ready for AI technology.

Chace’s theme was that artificial intelligence (AI) is a great tool for human beings and reticence around it is emblematic of the wider problems we have in society rather than anything we should be scared of.

This attitude has permeated some parts of the pensions and retirement industry but now appears to be scaling back as more companies gain confidence in experimenting with AI.

There is also the risks of over-egging artificial intelligence (AI) technological input to companies, which could be a major issue going forward in the industry.

A report from the EY in November 2024 specified how companies could be putting themselves in problematic situations to regulators, customers, and shareholders if they exaggerate their prowess with artificial intelligence whether inadvertently or not.

Cerulli said the focus should be on smaller, incremental changes and development with AI instead of large-scale transformation projects.

“Focusing on more day-to-day functionality enhancements, asset managers and recordkeepers have much to gain from implementing AI tools into their back-office operations,” said Adam Barnett, Senior Analyst at Cerulli. “In the same realm as legal document summaries, beneficiary designations would greatly benefit from AI enhancement. Until recently, beneficiary forms were exclusively paper-based, meaning recordkeepers have decades worth of designations, many of which may have been superseded by newer submissions, marriages, divorces, etc.,” he said.

At the same time, AI has yet to make inroads into other areas of DC plan management.

According to the report, 73% of target-date managers say AI will not be incorporated into asset allocation selection, glidepath personalisation (at the participant or plan level), or glidepath design.

Meanwhile, 67% say AI algorithms will not be used in risk management. DCIO asset managers confirm the findings of Cerulli’s target-date survey, with 59% of respondents indicating that AI will have no material impact on managing target-date products in the next year.

Looking forward, Cerulli said that questions remained about AI’s efficacy and how it might fit into the retirement industry. “The DC business is hampered by inertia, with technology and tools that are often outdated and inflexible—one reason many providers are turning to third parties to manage their tech stacks,” it said.

“Establishing partnerships with such firms will be essential for recordkeepers looking to differentiate their financial wellness and engagement capabilities in the next five to 10 years. Partnering with third-party AI providers will enable recordkeepers to focus less on their technology and more on being retirement experts,” said Barnett.

“Cerulli believes that AI could play an increased role in the retirement industry. Efforts undertaken now to explore efficiencies will ensure a smooth transition to AI-powered retirement tools of the future,” he said.

With the current furore around DeepSeek and OpenAI roiling the world’s stock markets it’s unlikely that the industry can turn away from AI and its adoption.

 

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