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.
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.
While investors increasingly seek to do no harm with their investments, tomorrow’s investment professional will be expected to manage portfolios not only with an eye on financial returns, but with a clear view of both how climate change can impact their holdings and on how companies are succeeding in minimising their environmental impact.
MBA students at the world’s leading business schools can now take classes on sustainable finance, and today’s working financial professionals must develop expertise in this topic as well.
Going private
The continued growth of private market investing – and the concurrent shrinkage of the public markets – offers opportunities for investment professionals in another arena.
By broadening our definition of active management to incorporate non-listed investments we can see that active investing is alive and well, as institutional investors look to the private markets for higher returns.
Professionals with the expertise and flexibility that can extend to evaluating these asset types, even in the absence of public sector benchmarks, will find a place for their skills.
In the context of so much change, ongoing learning across the arc of one’s career is increasingly important.
No true end-point exists when it comes to learning over the course of one’s working life, and investment professionals must put real energy into their careers and embrace a growth mindset that drives them to continue to learn.
One consultancy, Opimas, estimates that more than 90,000 roles in the fund management industry globally will be eliminated within the next decade due to the adoption of artificial intelligence.
Somewhat more optimistically, we see growth coming elsewhere, particularly in wealth management, the emerging markets, and – longer term – the evolution of private markets as a vehicle for the long-term retail investor.
One thing is certain: as the investment industry is transformed by change at an unprecedented pace, investment professionals must adapt and embrace new challenges and opportunities for career success.
While core investment competencies will remain essential, the ability to navigate disruption will be vital.
Gary Baker is managing director of EMEA, and industry and policy research at CFA Institute
