Investment Professional of the Future

Investment Professional of the Future

The Importance of Teams


In Investment Firm of the Future, we suggested the growing value of “T-shaped” investment professionals—that is, those who are adept at combining deep-level knowledge with wider connections, understanding, and perspectives across the whole organization. We extended that thinking to “T-shaped teams”— teams with broad and deep collective intelligence that act using the benefit of a collaborative culture and cognitive diversity across the team. The innovation team described earlier is an example of a T-shaped team.

As organizations strive to be more agile, competitive, customer focused, and faster to respond to business problems, there is a move toward team-based or cross-unit organizational structures that can also lead to reduced inefficiencies and improved work processes.xvi Within the investment management industry, this trend has led to less reliance on star portfolio managers in favor of portfolio management teams. In 2016, according to the data provider Lipper, more than three-quarters of US mutual funds (6,219 out of 8,072) had at least two managers.xvii

Although there are differences by region, the move away from a star culture also means professionals have greater career path flexibility to make lateral moves without the burden of disrupting a solo track record. Career breaks, sabbaticals, and work–life balance can be looked at anew. Furthermore, in an industry that values stability, even personnel turnover can be viewed less critically by clients because a team can nevertheless provide continuity.

Development of investment management teams has also prompted a focus on workforce diversity because it is thought to improve decision making, which ultimately leads to better business and investment outcomes. In a 2017 CFA Institute survey of more than 800 institutional investors, the majority (55%) believe that gender diversity in investment teams leads to better performance through the integration of diverse viewpoints (see Investment Firm of the Future, narrative 15).xviii

A study conducted by Boston Consulting Group and the Technical University of Munich showed that efforts to diversify management teams at all levels in terms of gender, ethnicity, geography,and experience can lead to increased innovation. The study demonstrated a direct relationship between the diversity of a company’s management team and its revenues from innovative products and servicesxix. The results are suggestive of diversity as a source of positive culture change and vice versa.

In order to build teams that are less prone to groupthink and bias in their decision making, firms may strive to increase cognitive diversity, bringing together individuals with different perspectives, experience, and ways of thinking. A more diverse labor force enables development of T-shaped teams that as a group have broad and deep collective intelligence (see Investment Firm of the Future, page 20).xx

Although many investment firms are attempting to meet the diversity challenge, change may happen slowly. In Investment Firm of the Future, 53% of CFA Institute members said the business case for improved diversity in the industry is strong or very strong, and this result is similar across geographic regions. Only 14%, however, said the speed of uptake of diversity and inclusion practices will be fast (see Investment Firm of the Future, narrative 15).xxi