“AI in Finance: Speed Without Scrutiny?”“Joseph Plazo on Why Algorithms Still Need Human Judgment”
At a recent event hosted by the Asian Institute of Management in Manila, Joseph Plazo—the founder of AI trading firm Plazo Sullivan Roche— argued that automation may have outpaced accountability.
He offered a sober reminder: faster trades are not always wiser ones.
“If you allow a machine to manage your portfolio,” he said, “ensure it reflects your priorities—not just your profit targets.”
???? **The Model Is Perfect. The Context Is Missing.**
Mr. Plazo is not a critic from the fringe. His algorithms are widely used by institutional investors from Europe to East Asia.
But that success, he suggests, carries risk.
“Optimisation without orientation is simply acceleration in an unknown direction.”
He cited a case during the COVID-19 pandemic when a bot under his supervision flagged a short on gold—just before the US Federal Reserve announced an intervention.
“We cancelled the trade. The model had been right on signals, but wrong on substance.”
???? **Machines Act Quickly. Humans Are Meant to Think.**
Plazo referred to what he terms **“strategic friction”**—the time it takes to think before a trade.
“Frictions allow institutional investors to consider second-order effects.”
He presented a framework his firm uses, called **Conviction Calculus**. It includes three questions:
- Does this trade align with the organisation’s ethical posture?
- Would an experienced fund manager endorse this move?
- Do we have a human at the helm, or merely a dashboard?
???? **The Ethical Gap in Asia’s Fintech Race**
Plazo’s comments come at a time of accelerating fintech growth across Asia. From Singapore to Seoul, AI-led investing is seen as both policy strategy and capital advantage.
But as Mr. Plazo points out:
“You can scale capital faster than accountability.”
In 2024, two hedge funds in Hong Kong lost billions after AI models failed to factor in geopolitical risk—a result of logic executed too quickly, and too narrowly.
“The outcome was rational—and disastrous.”
???? **Contextual Intelligence May Be the Next Frontier**
Plazo remains bullish on AI’s potential—but not its current limitations.
His firm is building what he describes as **“narrative-integrated AI”**—systems that account for click here macro context, cultural tone, and regulatory environment, not just price and volume.
“The next phase of AI must engage with uncertainty, not ignore it.”
Investors from Tokyo and Jakarta reportedly expressed interest in these models after the speech. One regional fund manager noted:
“This is the first practical answer to AI’s ethical vacuum we’ve seen in Asia.”
???? **What Happens When the Machine Is Always Right—But Still Wrong?**
Plazo ended with a line that encapsulated his thesis:
“Flawless code may be the most dangerous tool in the wrong context.”
It was less a warning than a call to apply the same rigour to ethics as we do to execution.