It is a logical truth that advancing our skills advances our careers. The challenge, however, is knowing where to focus our personal development so that we get the most benefit from it. CFA Institute’s “Future of Work in Investment Management: Skills and Learning” research report identifies current gaps in investment industry skills supply and demand, highlights sources of industry disruption, and examines the intersection between them. As such, it provides a road map on how best to move forward in our careers.
Development areas
The report breaks down investment management into four skill categories:
- Technical skills are the core competencies of the industry, such as financial analysis, asset valuation, portfolio management, etc.
- soft skills they are more nuanced and qualitative. Negotiations and relationship management as well as effective communication are some prime examples.
- Leadership skills focus on ethical culture, governance and how to articulate an organizational mission and vision.
- T-shaped skills they form the nexus between deep technical knowledge in one domain, a broad understanding of other disciplines, and the ability to synthesize the two.
The importance of these skill categories depends on where we are in our careers. Technical skills are more valuable at the beginning: they are often necessary knowledge to enter the sector and to carry out our work on a day-to-day basis. However, as we move up the ranks, soft skills and leadership skills grow more vital as relationship management and influence become integral to fulfilling our responsibilities. T-shaped skills also increase in importance as we move up the career ladder and are called upon to demonstrate our situational fluency and understanding of organizational contexts.
Importance of skills in professional development
Of course, new products and technologies combined with regulatory uncertainty have added to the complexity of the already complex investment management industry ecosystem. So while there is no substitute for technical, soft, or leadership skills, T-shaped skills have become especially critical. The CFA Institute’s previous “Investment Professional of the Future” report found these skills to be the most important type to develop. A recent survey of over 8,000 LinkedIn users supported this: T-shaped skills were considered more valuable than technical, sustainability/ESG and soft skills. The question is why.
Rank the importance of the following types of skills to successful investment professionals in the next 5 to 10 years (% of top ranked)
Disruption as a driver of change
Almost 4 in 10 respondents to the Skills and Learning survey believe their job role will change substantially or cease to exist in the next 5 to 10 years. Disruption, according to this cohort, is inevitable.
So where does the disruption come from? Respondents to the Skills and Learning survey expect new analytical methods, such as artificial intelligence (AI) and machine learning (ML), and a greater emphasis on sustainability to be the two main sources of interruption of work function.
Which of these industry disruptors do you expect to significantly contribute to change? (select all that apply)
T-shaped mindsets help us hone our adaptability and adapt to new trends and technologies. In fact, the continued development of these skills may be the most effective way to prepare for the uncertain future that lies ahead. Industry disruptors often arise from gaps in the development of key skills. Recent industry trends prove it. AI/ML and sustainability are the two main sources of disruption. They are also areas where people who demonstrate competence are greatly outnumbered by those who pursue or are interested in pursuing competence. In other words, the demand for talent in these areas far exceeds the supply, which is why current and aspiring investment professionals may want to focus on them.
Supply and demand of key skills
As new technologies and investment products and strategies come online, broad knowledge across multiple disciplines will be critical. Today’s innovations will become tomorrow’s conventions as specialized skills are integrated into the generalist toolkit. How quickly we can adapt to these transitions is a factor in skill adjacency: the more aligned the emerging skill is with the generalist skill set, the faster it can be integrated.
AI/ML and sustainability demonstrate this relationship. Sustainability is an extension rather than a rejection of traditional investment approaches: it aims to build a more holistic view of investment risks and opportunities. This means that the technical skills required overlap or are adjacent to those already widely applied in investment management. Therefore, integrating sustainability approaches into the generalist skill set should not be too important.
AI and ML, however, pose a much bigger challenge. They require fundamentally different skills (data science, coding, etc.) than most investment management generalists have at their disposal. Therefore, the sustainability supply-demand skills gap will likely close at a much faster rate than the AI and ML talent gap. And this is something to consider when considering how to position your career for the future.
Improving skills for the future
Investment management is ripe with opportunity and ripe for disruption. In such a competitive and changing landscape, diversifying our skill set is essential. An additional focus on developing more T-shaped skills can help us prepare and adapt to the inevitable transformation of the industry. We need to identify gaps between talent supply and training demand to position ourselves for career advancement.
Right now, adjacent skills like sustainability may be low-hanging fruit. We need to think about what skills are in demand and adjacent to our existing knowledge base. These can be good goals to focus on. They can develop quickly without straying too far into unknown terrain.
Other skills that are less analogous to traditional finance may be more difficult to develop. But if they have something like the potential of AI and ML, they can also pay more dividends in the long run. Given their complexity, these skills are likely to remain the domain of specialists for the foreseeable future.
But whatever subject or skill category we choose to focus on, we must commit to lifelong learning, to learn something new every day. Investment management is too dynamic an industry, the pace of change too rapid, to do otherwise. No practitioner can afford to let their knowledge or skills remain static for long.
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All posts are the opinion of the author. Therefore, they should not be construed as investment advice, nor do the views expressed necessarily reflect the views of the CFA Institute or the author’s employer.
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Ryan Munson
