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Adapt or Die? Investment Biz Braces for Tech Effect

Most investment industry workers expect their job functions to change over the next five to 10 years as a result of technological disruption–with nearly half expecting that change to span from significantly different to job eliminating–according to the findings of a new report released by CFA Institute, titled the Investment Professional of the Future. The report explores how investment industry roles, skills and organizational cultures are evolving in the face of technology disruption.

“We have been looking at what are the impacts of disruption on the investment industry and what is the personal impact to people working in the space and the role of disruption,” said Rebecca Fender, head of future of finance at CFA Institute.  The report explores how investment industry roles, skills and organizational cultures are evolving in the face of technology disruption, and is the third installment in a series from CFA Institute that examines the future of the investment industry and the implications for firms and for those working in it.

Rebecca Fender, head of future of finance, CFA Institute

“What we found was that most people expect their role will change in five to 10 years,” Fender said. In fact, according to the survey, 48% of respondents expect their role to be significantly different or nonexistent within five to 10 years. Among financial advisers, the rate is 58%. Twenty percent of respondents said they expect that their job won’t exist at all.  “Developing new skills will be essential to be competitive; investment professionals must adapt, or risk obsolescence,” the report said. It also found that career adaptability is essential for investment professionals looking to succeed in this changing technological landscape.

The good news for those working in the investment industry is that while more data collection will be automated, there will be an increased need for investment professionals to analyze the data. “The availability and access to better quality data will improve,” Fender said. “The new roles will be more about judgement.” She added that as technology continues to develop and become more dominant in the industry, the “human elements” will continue to be important for doing great analysis. “Those needs won’t go away.”

Robert “Vince” Smith, chief investment officer, New Mexico State Investment Council, agrees that there is no need for investment professionals to be alarmed about the increased use of technology just yet. “I began my career investing public funds as a securities analyst right when Microsoft released the first version of Excel for Windows, and PCs started appearing on desktops. That was revolutionary. Not sure I’m all that impressed with mere “disruption,” he quipped.

AI + HI: The Future of Work in Investment Firms

Artificial intelligence (AI) and human intelligence (HI) will also play a big role in the future of investing, according to the CFA report. AI is displacing and/or enhancing investment roles, making it essential for professionals to become more tech-savvy. That said, the interaction of AI and human HI will be key, the report said. “Routine tasks will increasingly be performed by machines, and the human element of judgment will become more important. The new human/machine interface requires people and AI to work together, and those that strike a balance will be most innovative and reap the most rewards,” the report stated.

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