Wanted: High-value investment professionals of the future

Depending on one’s perspective, the future of the investment management profession may be as bright as the noonday sun, or there could be clouds on the horizon. No matter which end of the spectrum you find yourself, we can all agree that innovations in technology and shifts in the way investors view wealth management are colliding to shape the future of our profession — and we need to adapt accordingly.

A recent CFA Institute study, Future State of the Investment Profession, unearthed several findings related to the challenges and opportunities facing investment professionals — the most compelling of which center around the growing importance of soft skills that complement strong research and analytical acumen.

It’s worth clarifying that technical skills will always be important. But think of them as a prerequisite for being in this profession. Data abound and the analytical tools at our fingertips make it infinitely easier to conduct rigorous analysis. The irony, however, is that continued technological growth will make our humanness even more critical in delivering value to clients.

To illustrate, look at how some brands are completely reshaping their respective industries. To say that Amazon has transformed the buying experience is an understatement. Startups like eyewear retailer Warby Parker are becoming billion-dollar companies by offering hip consumers a high-touch, personalized shopping experience — all online. Meanwhile, Google delivers an entire suite of solutions to the marketplace — everything from free email to highly customized enterprise solutions.

In each of these examples, there’s a common theme: Brands are using technology to create value and automate business tasks, and employees are being called upon to perform more high-value services that deliver greater value to the marketplace.

Today, employees are more than cogs in a wheel. Customers have more choices than ever. And with products and services becoming increasingly commoditized, the level of service that employees and teams deliver shape perceptions of your brand and can literally make the difference between failure and success.

The investment management profession is poised to experience similar changes. In the not-too-distant future, we’ll find ourselves in a cyborg environment in which tasks such as financial statement analysis, valuation and even evaluating executives’ qualities become automated. Meanwhile, humans will need to interpret these data and then bring their soft skills to bear as they convey their visions and ideas to colleagues and clients alike. Further, given the lack of trust that investors have in investment professionals generally and consumers’ growing reliance on social media to air their grievances, hiring employees with outstanding soft skills is something firms can’t afford to ignore.

New skills for new circumstances

To explore the importance of soft skills in the investment profession, among other important issues, we asked 1,145 investment leaders to rank the significance of certain skills for three key investment roles — chief investment officers and portfolio managers, CEOs of asset manager organizations and CEOs of asset owner organizations. According to those surveyed, the top-ranking skills are:

• The ability to articulate a compelling vision for the institution;

• Relationship-building skills; and

• The ability to instill a culture of ethical decision-making.

The bad news is that these leadership skills can be hard to find. For instance, 53% of survey participants say it’s hard to find candidates with the ability to articulate a compelling vision for the future. Encouragingly, 73% of respondents do believe that investments professionals with relationship-building skills are somewhat or readily available in today’s talent pool. However, while the ability to instill a culture of ethical decision-making is another top priority, more than 40% of respondents say this trait is difficult to find.

How firms can adapt

As firms prepare themselves for the future, the first necessary step is to change their organizational mindsets. It’s important to mobilize employees and teams around the idea that delivering value to clients is their ultimate goal. This is reinforced through training in areas such as ethics and specialized financial analysis.

The growing acknowledgement of the need for ethical decision-making is not simply a matter of good behavior, but also plain old good business. It’s not necessarily because advisers are good people — though they generally are — but they also understand that being more ethical means a more profitable, successful business.

Fostering an organizational culture rich in cognitive diversity is also essential. Diversity is often measured in terms of gender, race and national origin. But the business case for diversity is linked to more intrinsic characteristics, such as a person’s values, perspectives, experiences, knowledge, and way of thinking. It makes sense: If everyone thought the same way, no new ideas would emerge. Diversity of gender and ethnicity is an important means to the end of generating great ideas.

Building a better world for investing

Both investment professionals and organizations must focus on more than just generating returns in dollar terms. We must focus on delivering results for the ultimate benefit of society.

This means we need to do more than give lip service to the idea of being customer-centric. Firms need to invest in employees with outstanding soft skills who can deliver the type of professional excellence that clients deserve and society needs.

(More: Financial advice industry must give ‘soft skills’ the credit they deserve)​

Bob Stammers is director of investor engagement at the CFA Institute.

Related Topics: CFA Institute