CFA Institute has published the fourth report in its Future of Work series, exploring the context, culture and content of work in the investment industry.
The report, The Future of Work in Investment Management: The Future of Skills and Learning, posits that the primary purpose of finance is to contribute to society by enabling wealth creation and increasing societal well-being. It also highlights current skills gaps in the investment industry, examines training trends and suggests changes to investment teams to better leverage diverse talent and the combined power of discrete but complementary skills.
The Future of Work series uses quantitative responses from a combined pool of more than 11,000 investment professionals worldwide across three surveys, 41 investment organizations representing more than 230,000 employees and more than 100 investment and human resources professionals in the management industry of investments.
The next generation
As competition for talent has grown across several industries, the report begins with an analysis of the investment career path, including how students view finance as a course of study and the attractiveness of finance as a career.
Overall, finance remains an attractive field, with 80% of students studying accounting or finance reporting that they believe their career prospects are as good or better than those of their parents’ generation, the report said. Among CFA Level I program applicants, the most common undergraduate majors were finance (38%), economics (15%) and business (15%), while STEM subjects (science, technology, engineering and mathematics) rose to 14% .
Continued interest in finance bodes well for the future of the industry, although investment professionals have diverse educational backgrounds and many organizations are beginning to hire school leavers before completing their degrees, the report noted.
The pandemic has caused some notable disruptions for those in training, including a shift in applicant demographics, the report said. The loss of a year of CFA exam availability between 2020 and 2021 meant that the average age of candidates entering the CFA program, which had been trending downward, increased in 2022.
In addition, the gender gap among applicants widened in 2021, reversing a multi-year trend and highlighting how women have disproportionately felt the effects of the pandemic, the report said. This resulted in an applicant ratio of 60% male and 40% female.
The future of investment roles
With 37% of CFA Institute members believing their role will be significantly different in five to 10 years, the report examines the type of roles investment professionals have, as well as how many roles are expected to change and why.
Fintech and IT (63%) are the roles most expected to change over the next 10 years, with 9% reporting that they expect their role will not exist in the same way in the future, states the the report. This is followed by salesperson (56%), sales (48%), accountant/auditor (47%) and chief investment officer (45%).
Most expect some roles to be disrupted by the impact of artificial intelligence and machine learning, the report said. Some also cited the inclusion of sustainability considerations in investments and the changing regulatory landscape.
The report mapped the career progression of CFA Institute members and found that the most common job change was from analyst to portfolio manager to CIO. Career paths are becoming more diverse – mainly influenced by the technology sector through fintech and entrepreneurs, especially private equity boutiques.
Skills for success
The CFA Institute uses a career skills framework competency model to help identify the knowledge, skills, abilities and other characteristics needed to perform well on the job, the report states. In a dynamic field such as investing, where the skills required to master often change, it is important to distinguish the minimum essentials required.
Technical skills are most important early in a career, with soft skills, leadership skills and “T-shaped” skills becoming more important over time, the report said. T-skills are a combination of deep knowledge in one area and broader knowledge in other areas and the ability to connect them.
The most important category of soft skills is influencing, persuasion and negotiation, the report said. Some of the skills that have become more important in the new world of work are more effective time management; be effective in influencing, persuading and negotiating; direct communication; and be more resourceful.