AI costs are rising and public trust is falling, the debate is just getting started
Authored by Dmitri Smolansky, Head of Derivative Overlays at Mercer, and Max Becker, CFA, Global Multi-Asset Principal at Mercer, the paper titled “The cost paradox of AI adoption” argues that rising corporate AI bills are being widely misread as evidence that AI is becoming less economical. The authors contend the opposite is true: the price of a fixed level of intelligence is falling sharply, even as total AI spending rises, because newer reasoning and agentic systems accomplish far more work per task.
“There is no contradiction between rapidly increasing AI spending and falling cost of intelligence: AI is becoming more economical, letting companies squeeze more intelligence out of every dollar they spend,” said Smolansky.
Mercer’s February 2026 Artificial Intelligence in Asset Management Survey, covering 131 managers globally, found that more than half of firms reported live AI integration in at least one strategy, and that 91% of participants planned to increase AI-related activity over the following 12 months. A Morgan Stanley survey cited in the paper found an average productivity improvement of approximately 11.5% among companies using AI. Stanford University’s 2026 AI Index reported gains of 14 to 26% in well-defined areas such as customer support and software development.
What advisors should take from July 29, 2026
The data from this single day does not offer a verdict on AI as an investment theme. It offers something more useful: a set of tensions that advisors can help clients navigate with clarity rather than hype.
The Gallup survey found one data point worth sitting with: the share of Americans who believe AI performs worse than a person when giving financial advice fell six percentage points between 2023 and 2026, from 49% to 43%, with more people now viewing AI as roughly comparable to human performance on that task, not better, but comparable.
