Research indicates that gender diverse companies deliver better returns with lower volatility for investors.
Diversification is the cornerstone of sound investment management, and yet diversity remains largely absent from the investment industry. Women investment professionals hold a mere 11 per cent of C-suite positions, according to the CFA Institute Gender Diversity in Investment Management study. In most financial firms, women are a minority of employees and that's bad for customers because women make excellent investors. Despite gender diversity making headlines across industries globally, the Indian finance sector remains stubbornly impervious.
Research indicates that gender diverse companies deliver better returns with lower volatility for investors. Efforts to reduce gender inequality in the workplace are important for another reason - as more women participate in the workforce, the quality of output and decisions improve. More female executives could transform the industry because they will bring new perspectives and turn old investment strategies inside out. Innovative thinking will spark new and unique solutions. Gender diversity will directly impact investment outcomes.
To achieve this transformation, interventions are required at various stages in a career. People tend to decide on a career in investment in early adulthood. More than 80 per cent of CFA Institute members surveyed made their choice before the age of 26. Not enough young women choose finance, and those that do are less likely to hold executive positions. Both pipeline and progression require attention. Young women need mentoring and support to understand how to make finance a lasting career.
CFA institute has made strides with its Women in Investment Management Initiative that aims to improve investor outcomes by encouraging gender diversity in the investment management profession. The India-first Young Women in Investment initiative is designed to create awareness about investment management, and enable young women to view the investment management industry as a viable long-term career option. A four-week boot camp followed by a paid internship with sector leaders is making the industry more accessible to young women. The initiative has been a remarkable success due to the support of many from the investment industry - the institutions, industry leaders and universities.
"The finance and investment industry is not restricted to finance students and graduates. And, the industry particularly needs women from diverse educational backgrounds," says Paul Smith, CFA, president and CEO, CFA Institute.
Even when women do choose investment management as a career, cultural factors play a role in restricting female participation. Indian women bear primary responsibility for homemaking and childcare. This unfairly affects their work-life balance. An environment that is not conducive means fewer women make it to the higher reaches of the industry and that impedes investment firms from achieving their full potential.
Institutions need to join hands to create an enabling environment that allows women to explore their true potential, and this is especially true for a country like India. India's workforce must be reflective of the diversity that exists within its population. Fast-growing industry segments such as finance are a storehouse of opportunities. Only when women take their place in the economy will the true potential of the country be unleashed. ReadMore
Technology In Investment Management - Friend Or Foe?
predicts that digital payments in India will exceed $500 billion by 2020, up from $50 billion in 2016. It's just one way in which fintech is changing the face of the financial industry. Fintech - the technological innovation in the design and delivery of financial services and products - is revolutionising customer expectations. Emerging technologies such as Artificial Intelligence (AI), big data and analytics, blockchain, cloud, Internet of Things (IoT), and robotics are disrupting traditional finance.
AI and machine-learning are transforming customer experience with personalised service and improvements in back-office efficiencies. Banks use big data and analytics in their fraud and risk management, and regulatory compliance. IoT is revolutionising insurance. But its growth is conservative in comparison to big data, cloud and machine learning, used in payments and alternative lending. Big data and machine learning are spotting trends and providing better investment insight. Robots are venturing into investment and changing how wealth advisory is delivered.
The effect of machines on investment management professionals is a pressing question.
Digital and emerging technologies will have profound implications in the field of finance, but they are still nascent. Machines still require human direction to carry out tasks. Robo-advisors cannot operate independently of their human counterparts because their algorithms require a longer learning curve. Blockchain may redefine how financial institutions operate but it is not yet mature and will need to overcome hurdles if a sustainable business model with regulatory approval is to be achieved. AI does improve customer service but only in unison with human professionals.
The real challenge is finding the right talent pool to complement the agility of the technologies. Investment management firms must compete with other industries using disruptive technologies to attract the best people. Investment teams and technical teams will need to be integrated to create checks and balances on the models and processes. Proper integration is a counter to the potential lack of transparency and interpretability in the decision-making in these models.
Fintech's prominence is shaping the investment industry's evolution. CFA Institute is engaging with regulators and policymakers to explore ways to support fintech's investor protection standards. To succeed in the new-age investment management industry bearing down on them, advisors need new skills and training in their core domain, and importantly in soft skills. A study found that organisations retooling for the future are instilling cultures of ethical decision making, to complement specialised financial analysis, and sophisticated IT skills. CFA Institute has also integrated big data, AI, and robo-advisory into its CFA ® Program curriculum.
The human element is still vital even as firms harness fintech capabilities to survive in an era of low latency and algorithmic, high-frequency trading. Technology will enhance advisors and investors will seek out institutions employing the right human-machine mix. Increased competition in the market will reduce fees and improve quality of service for investors. Technology will create new business models and revenue streams for financial institutions. The investment industry and its customers can both be winners when the blend is in equilibrium. ReadMore
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