Asked about the risks and opportunities AI poses to Federated Hermes, the CEO says he sees it mainly as an opportunity. This is the advice he gives interns who worry AI will replace them.
…go west, young American, go west. And that's how Federated Hermes is basically structured. You've got to have the investment management. You got to have somebody telling the story on the distribution side. And you got to get each of those banks with love and trust. And that's our business model.
We referenced earlier the data center build out and the large tech companies. AI is coming for every industry. What risks or opportunities does AI pose to your company?
I would look at it as primarily opportunities, although there is some beware the jabberwalk, okay? But to me, we aren't going to have less than 2,000 people, which is about what we have now down in the road. When we have our summer interns come in, the first question is always, oh, AI is going to take care of me. I won't be able to have a job. And my answer is always: look, pay the extra 20 bucks a month. To use AI, and then you'll get the job. And we are going to be looking at it more as a developer of quality. I tend not to use the word efficiency when we're talking about AI, especially in an employment circle, because efficiency means FTE, I'm dead. Quality means, oh, I could do it better. One example of that is we get a lot of phone calls from investors, and they have to be screened, and then you have to have quality control and all that. And the managers do that. And then they grade them. Well, when you have AI do that, all of a sudden, instead of only listening to one out of every 50 or 100 calls, you listen…
One of the industries I'm really fascinated by right now that I think is undercover, cybersecurity. How much are you investing into cybersecurity and how much more of an issue is that today with AI?
It is a huge issue and very big. And how much investing? A lot of our investing is done with our custodian banks and transfer agents. They are all on the glass wing operation where they're studying what has happened with that release of the mythos. And they are putting the big money because we…
You're known in the industry as, if not the longest-serving CEO in the mutual fund industry, certainly one of the very longest serving CEOs. What's been the secret to your tenure?