13.
Challenges in achieving collective intelligence
Investment firms build collective intelligence from well-trained professionals using disciplined decision processes and effective communications. These models’ success hinges on the ability of firms to deepen the range and adaptiveness of their professionals’ skills.
KEY POINTS
- Competition will continue for professional talent among investment firms, particularly at the leadership level. This likely takes place in an overall shrinking of industry headcount in Europe and the Americas as costs come under growing pressure. Asset management firms’ headcounts likely mirror the trends at sell-side firms but with a lag. The challenge is to use fewer people to achieve more by changing the roles played by people and technology.
- More than 20% of CFA Institute members surveyed in Asia expect the headcount for investment professionals to grow significantly (more than 3% annually) in the next 5–10 years, whereas only 8% of members in the Americas and EMEA expect the same. In the latter regions, approximately 40% expect the number of investment professionals to decline over that time.
- Changes in the nature of skills and job mappings lie ahead. In Future State of the Investment Profession, the attributes identified as critical for future leaders are as follows: ability to articulate a compelling vision for the institution, relationship-building skills, and ability to instill a culture of ethical decision making.
- Asset management firms must turn to a wider diversity of skills in their workforce, such as the following:
- Creative intelligence: developing unusual and innovative ways to see and solve problems, generating forward-thinking theories, and finding creative ways to respond to new situations
- Social intelligence: being aware of others’ reactions, gaining agreement, persuading others of a course of action, and providing emotional support
- Situational fluency: having a good grasp of the tacit aspects of organizations, reading wider context accurately and understanding the interconnections at work, and being at ease with technology
- Diversity of skills is key as firms strengthen their decision processes and test decisions in a highly competitive industry.
- Investment firms need to compete more successfully with the largest employers of data science professionals. The particular need is for investment professionals who can understand patterns that may reflect noise more than signal.
- The big question in this narrative is how successfully investment firms compete for, develop, and retain talent, recognizing the evolving needs in their businesses. Important in this regard is a strong culture, particularly how diversity and inclusion are practiced, how much individuals are motivated by purpose, and the degree to which colleagues are valued.