Renaissance means rebirth or re-awakening. Does the investment professional need a radical makeover? Is she really that broken? These were the opening thoughts at our recent roundtable event in Sydney (22 Mar 18). We studiously avoided providing a direct answer to the question but proceeded to unpack the issues using three lenses.
- Purpose: we started by exploring what motivates people to perform in the workplace. Attendees ranked their own motivations (weighted scores in brackets):
– Interesting and enjoyable work (29)
– Help clients (21)
– Help to do something meaningful with societal purpose (17)
– Recognition/ by peers, friends and family (9)
– Pay (8)
– Help your organisation to achieve its financial goals (3)
We acknowledge that the attendees had self-selected to attend, knowing the agenda in advance. And yet it is noticeable that financial motivations, personal and corporate, are the bottom two answers (this may not (would not?) be true for a low-wage, low-margin industry).
The purpose of having purpose is to channel energies towards the creation of value, and so the session explored the disconnects between the investment industry, the organisations and the investment professionals – and the end saver. Collective culture – whether client focused, results focused, or investment focused – and how it links to the individual was noted to be highly important in addressing these disconnects. Beyond this, this issue of sustainability and specifically the UN sustainable development goals, shows one way that the industry could reset its purpose – for the benefit of investment professionals, investment firms and wider society.
- Skillset: the investment industry is in a state of flux – buffeted by regulatory pressure on fees and alignment, potential disruption by new players and an economic environment where the prospects for sustainable real returns look bleak. Given this context, the session explored the increasing need for improved diversity (yes gender and other aspects, but also cognitive), for T-shaped professionals (that is, those with both breadth and depth), and given the advance of the machines, the skillsets which would be most important looking forward 5 – 10 years. Attendees were asked to rank nine skills (including technical competencies such as IT and financial analysis), with the answers being:
#1 Relationship-building skills
#2 Ability to articulate vision
#3 Ability to instil culture of ethical decision making
These closely mirrored a separate poll conducted by the CFA Institute (the order of #1 and #2 were reversed).
- Team fit: institutional investment is increasingly a team game. Individuals shape – and are shaped by – their interactions with each other; through these interactions strategic investment decisions are made, value is added to portfolios (or destroyed) and a progressive (or regressive) culture is built. This session explored these issues as well as thoughts on the value of cognitive diversity, the characteristics of effective groups and our observations on best practice investment committees. The big takeaways from the collective discussion were (1) that we need better ways of aggregating views with our teams, and (2) by far the most important factor for effective team working was the level of trust within the group. Trust was defined as ‘time plus consistency’, which also struck a chord with attendees.
We then asked whether a purposeful, re-skilled, team player was ‘future perfect’? Attendees were asked to consider four scenarios – particularly whether those scenarios had any implications for purpose, skillsets or decision making (team composition or process). Surprisingly (to me – I was expecting purpose to be invariant) the groups did feel that different scenarios would suggest an evolution of purpose. More obviously, the different scenarios called out the need for different skill sets. As we don’t know which scenario the future will most closely resemble this circles us back to the idea of greater T-shapedness.
Incidentally, 72% of the attendees thought the value of scenario thinking was strongly positive (17% mildly positive), suggesting we would make more of this tool. However, scenario thinking does not make us future perfect. At best it allows us to make known some aspect(s) of the knowable future. Much (most?) of the future will remain unknowable, and so the big conclusion is that, after a purposeful make-over, the renaissance investment professional will need to be both resilient and adaptable.