The investment industry is being reshaped by several factors which can leave industry professionals feeling uncertain of how they can keep up with the developing trends.
But a new report from the CFA Institute aims to help along with the establishment of a new center focused on addressing the most impactful themes facing the investment industry.
The Research and Policy Center will engage and convene thought leaders, policymakers, decision-makers, and a community of subject-matter experts on four central pillars: Capital Markets, Technology, the Future of the Industry, and Sustainability.
“Our goal is for the Research and Policy Center to be a positive force for the industry, delivering and transforming research insights into actions and practical applications that strengthen markets, advance ethics, and improve investor outcomes for the ultimate benefit of society," said Paul Andrews, managing director for Research, Advocacy, and Standards at CFA Institute.
The new report Future State of the Investment Industry takes the key themes of the new center’s mandate and consider the direction of travel over the next 5-10 years by setting out some scenarios.
Firstly, the report notes that diverging values and goals across demographics and geographies will require greater personalization of investment products, which will be easy to access and mobile-first.
Thematic options will need to acknowledge that some groups will demand strong sustainability goals while others will require the opposite.
Direct indexing and tokenization will see increased focus and there will be new solutions required for aging populations and those with younger demographics who will demand new approaches to retirement planning and products.
Although noted that not all investors will embrace sustainability, the report also highlights the unstoppable force of ESG which will continue to shape policy for governments and financial institutions.
The push towards net zero will also require investment industry talent with sustainability credentials and the industry will also find wealth professionals favouring firms that align with those values.
The continued trend of digital transformation is another key element of the industry’s future.
The report says that greater use of AI for mundane tasks will free up humans to focus on more extensive investment analysis.
It also sees growth of digital assets and other tech-driven investment solutions, which will prompt more people to become investor and assists investment professionals in managing their needs.
Social media and other communications will continue to create challenges such as bubbles and other excesses, while regulators will struggle to keep up with the pace of technological change.
Finally, the report addresses the scenario of the end of cheap money.
It considers higher interest rates that inhibit growth and continue to disrupt financial markets and institutions. Risk appetite is likely to be subdued.
Rhodri Preece, CFA, senior head of research at CFA Institute says the report’s survey findings show an investment industry at an inflexion point.
“Forces that have defined the sector for years, if not for the last five decades, have begun to shift or even reverse, with economies under strain as we enter a new, uncertain, and transformational era,” he said. “Our analysis reveals several implications for firms, including opportunities for greater product personalization, AI-driven productivity gains, and industry conditions that are more conducive for successful active managers to demonstrate their value.”
He concluded that the challenge to the industry and to investment professionals will be “to adapt quickly and to create a better, more integrated, more sustainable, and more client-focused sector."
The report is available on the CFA Institute website.
Fueled by a recent shot in the arm from private equity firm Carlyle, MAI adds a $490 million Atlanta RIA as it keeps building out its national footprint.
“Todd Burkhalter organized what is likely the largest Ponzi scheme in Georgia history,” said one FBI official.
With experience from Goldman Sachs and TD Ameritrade, the RIA's newest SVP hire adds to a recent wave of executive departures from hybrid Osaic.
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
