What Skills Will Be Needed For Investment Careers Of The Future? This Report Has Answers

Even before the COVID-19 pandemic, advancing technologies and shifting priorities were changing the way financial firms did business. Think crypto, block chain, and a growing concern for how investments impact the world around us.

Now throw hybrid work environments into the mix – overwhelmingly preferred by MBAs, according to this survey – and the shape of financial careers of the future will look significantly different than those of even a year ago.

“The world of work has been experiencing dramatic changes, and as the investment industry competes for the best talent, an opportunity exists for investment organizations to reset and reframe their focus on talent development programs that match the pace of change,” says Rebecca Fender, head of strategy and governance for research, advocacy and standards at CFA Institute, a global association of investment professionals.

“It’s not only new markets, asset classes, data sources, and investing techniques that are demanding a fresh focus on skills and learning. For many, hybrid working has opened a new way of thinking about the employer-employee relationship.”

AI, DEFI, SUSTAINABILITY HAVE HIGHEST GAPS IN SUPPLY & DEMAND

This month, CFA released the fourth report in its Future of Work in Investment Management series. The Future of Skills and Learning identifies the gaps between the supply and demand for career skills, as well as changes needed to investment teams to leverage the diverse talent.

CFA surveyed 2,137 CFA Institute members in November 2021, drawing from 41 investment organizations. Further, more than 100 investment professionals and human resources professionals from around the world provided qualitative input through virtual roundtables.

The report found that fewer than half of survey respondents receive employer support to develop the new skills they need in the changing industry. Meanwhile, skills such as artificial Intelligence (AI), machine learning, decentralized finance, and sustainability have the largest gaps between interest in learning and supply of expertise.

“We can see that there is an emerging demand for upskilling in the areas of sustainability, and also in artificial intelligence and data science. Those two areas are really the sources of primary disruption to investment industry job roles, and it’s where we believe future professionals will need to focus the upscaling requirements,” says Rhodri Preece, senior head of research at CFA.

UPSKILLING AND RE-SKILLING

For its report, CFA asked industry leaders what they see as the most important skill types for the next five to 10 years

  • Technical skills, 14%: These are the foundational skills taught in business schools and through other training tools such as tools of financial analysis and portfolio management applications and emerging skills like ESG analysis and artificial intelligence.
  • Soft skills, 16%: These include things like communication, collaboration, relationship management, empathy, creativity and so on. “This is an area that a lot of hiring managers will say they don’t find enough, that there’s a lack of supply to some extent. So we find that there are many people working on soft skills to add to their technical skills,” says Rebecca Fender.
  • Leadership skills, 21%: The ability to articulate mission and vision, motivate and inspire teams, and promote the important purpose of finance, the “why we do what we do,” Fender says.
  • T-Shaped skills, 49%: This is by far the largest category of skills industry leaders are looking for. These are a combination of deep subject matter expertise in a single area, a wider understanding of other fields, and the ability to bring them together.

“Hiring managers expect T-shaped skills to be more important in the future,” Fender says. These include things like understanding the full system that you’re working in, the larger organizational context, and having adaptability and situational fluency,” Fender says.

“This also includes having a valuable network of contacts, and understanding and leveraging diverse perspectives. So if you think of what a T shaped person or person with T shaped skills looks like, oftentimes, they’ll be the ones who can ask the very, very helpful questions just at the right time to move a team forward.”

SUPPLY VS DEMAND FOR HIGH DEMAND SKILLS

CFA also surveyed industry professionals on 16 specific high-demand skills, looking at the demand for them in the marketplace as well as the supply in terms of proficiency.

In the CFA graph below, the green bar to the right shows skills that firms are currently pursuing, are planning to pursue in the future, or are already proficient in. Skills that rate highest here include AI and machine learning (64%) and sustainability (70%). Soft skills also rank highly at 64%.

The blue bars to the left represent the supply of these skills in the market, based on self assessments of the survey respondents. In between, CFA measured the gaps between demand for the skills and the supply.

Again, we see the biggest gaps in AI and machine learning and sustainability, both at 61%. They are followed by decentralized finance/blockchain and climate risk, each at 56%, and crypto assets at 54%. Impact investing has a 50% gap between supply and demand.

The three stars in the chart above designate skills that are in demand to people earlier in their careers, which could help identify trends coming in the future.

A CLOSER LOOK AT T-SHAPED TEAMS

As new data sources emerge along new skill disciplines, such as in sustainability and AI, firms will need to rethink the way they create their teams. Think back to the T-shaped skill sets where an individual has deep, vertical knowledge of one discipline but wide, horizontal knowledge of several others. The same T-shape concept should be applied to teams as well.

For example, you take people with deep knowledge of the types of data and factors that go into climate trends, or those with deep knowledge of AI, and you bring them together with investment professionals.

“So in the middle you have those T shaped skills that they bring together, but there’s a recognition that in artificial intelligence and quant areas of the industry, you need a lot of specialization,” Fender says.

New analytical methods are also likely to change the jobs people now perform. More than a third of CFA Institute members surveyed believe their roles will be substantially different in a decade or less.

“Not surprisingly, FinTech roles are the ones most likely to be changed in the coming years,” Fender says. More than 63% of those working in the role expect significant change and 9% expect that these types of roles will not exist in the same way in the future.

TAKEAWAY FOR STUDENTS AND BUSINESS SCHOOLS

What does this mean for business schools and how they prepare students for investment careers? Peter Watkins, director of institutional partnerships at CFA, notes that in research done within CFA’s network of 730 affiliated universities, they found that traditional areas of finance are well covered in business schools, but some of the soft skills and areas of leadership are less so.

“I think, probably, the universities are needing to catch up a little bit with the new demands. And I think disruption is an opportunity for young people entering the job industry,” he says. “So where we know that existing professionals don’t have the skills, they don’t have ESG or sustainability skills, particularly, some are developing them fast but others don’t have that, that’s an opportunity for those joining the the job market and ways to make themselves employable.

“I think that’s part of the messaging we’re trying to give to students, to make sure people are aware that diverse backgrounds are very attractive to employers. Learn where the gaps are and develop skills in those areas. ESG and sustainability are standout examples of that one where there’s a lot of interest amongst young people.”

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