Advisers must adapt to survive

Advisers must adapt to survive

Factory workers replaced by robots.

Chatbots taking over from call centre personnel. Traders replaced by algorithms. The list of positions impacted by automation and technology goes on and on. 

Professionals in the investment management industry face accelerating disruption.

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Nearly half of the global investment professionals the CFA Institute surveyed for a new report, The Investment Professional of the Future, say they expect their roles to change substantially within the next decade. Current and future investment management professionals must prepare – now – to be successful in an increasingly tech-driven future.

Fintech, of course, is seen as the great disruptor of our time.

Let us start with a fundamental fact: technology will continue to drive change in our business. That means investment management professionals must embrace technology, no matter their roles, and focus on what we see as a new skills equation: AI+HI. Artificial intelligence plus human intelligence.

The sum of this equation becomes more than either of the component parts because it leverages the benefits of both. The new human/machine interface requires people and artificial intelligence to work together, and those professionals who strike the right balance will reap the rewards.

Skills mismatch

As technology automates many aspects of the investment process, the soft skills of investment professionals take on an even more prominent role: communications, leadership, listening, empathy, relationship-building, creativity.

Key points

  • Investment industry professionals are facing a lot of disruption
  • Sustainable investing can help investment professionals prove their value
  • There is a skills mismatch in the investment industry

These skills transcend roles and are too often in short supply in an industry known for technical and quantitative prowess. We have created a mismatch between developing professionals with deep technical skills and what many clients and employers really require.

Experience and judgment become more important when the decisions that need to be made carry greater impact and higher risk. No website, app, or software package can advocate for investors like a professional. No robot can deal with investment uncertainty, poor data and implied risk like a trusted adviser.

This industry must morph from manufacturing more and more products to delivering solutions that serve clients. The most important skills of the future, therefore, will be solutions-based skills: understanding client needs in order to deliver investor-driven outcomes.

Higher purpose

Increasingly, both retail and institutional investors seek investment products with a higher purpose.

This focus on impact investing and sustainability will require training in environmental, social and governance analytics and stewardship on a much wider basis. The investors of the future – increasingly women and millennials – have demonstrated keen interest in these products.

Our research shows that 73 per cent of the investors we surveyed take ESG factors into account.

We believe this percentage will continue to rise in the years ahead. This represents a true market opportunity, one in which the investment professional of the future needs to be fluent.

The impact of climate change, for example, contains profound consequences for investors.