One of the main takeaways from a career panel we cohosted with several CFA societies this spring was "do not work for a bank." Judging from the recent announcements out of some of the largest European banks, the warning seems eerily accurate and timely.
The purpose of the career panel was to discuss long-term trends in the investment management industry that will impact people’s careers. For example, if people had been warned about the all but inevitable demise of the brick-and-mortar travel agency business, many might have sought alternative careers. Similarly, in the investment management industry, we have all seen sectors fall in and out of favor. So we assembled a panel of experts from different backgrounds in the hope that some of their insights could be of help to our members in their career decisions. This is the context for the "do not work for a bank" remark. One "hot" area that was identified, however, was financial technology (fintech).
Seven months later, both takeaways still seem to ring true.
On the heels of similar announcements by Deutsche Banks and Credit Suisse in recent weeks, Standard Chartered announced last Tuesday that it will cut 17,000 jobs worldwide. This comes to about 17% of their total employees. UniCredit reportedly is also considering taking similar measures to help boost profitability.
We have no reason to believe banks will follow the trajectories of travel agencies — or print media for that matter — but the industry does seem to have come under attack in the new era of the internet of things. (Of course these European banks' troubled situations are more directly results of tightened capital requirements after the financial crisis, but that is a discussion for another day.)
Although fintech has been broadly defined by some to include the full spectrum of technologies that could improve productivity in the financial industry, I thought a more productive definition could be "internet technology solutions (and the firms that own and promote them) that represent alternatives to traditional financial intermediaries, such as banks, brokerage firms, and exchanges."
Accenture reports that in the first nine months of 2015, US$3.5 billion of investments went into non-bank fintech investments in the Asia-Pacific region alone. Notable deals include those in the mobile payment and peer-to-peer lending areas. (Perhaps as a sign of things to come, when I spoke on multi-asset strategies at a wealth management forum in Shanghai a few weeks ago, a later panel was made up of some of the best known peer-to-peer entrepreneurs in China.)
A number of themes seem to have emerged from last month's Money 20/20 Conference, where fintech start-ups meet their end users, with financial inclusion, mobile payments, and blockchain technology being the most notable.
The internet of things was also the theme at the Fortune's Global Forum earlier this month. Ignore it at your own risk.
Below is a list of links from the paragraphs above as well as some of the other interesting reads I have come across in recent weeks. Happy reading and enjoy the weekend.
Markets
- "Europe's Biggest Banks Are Cutting 30,000 Jobs" (Bloomberg)
- "Fintech Investment in Asia-Pacific Quadruples in 2015" (Finextra)
- "Five FinTech Trends to Watch in 2016" (Tech.Co)
- "Ignore the Internet of Things at Your Own Risk" (Fortune)
- "Investment Management Industry Trends and Career Implications" (Livestream)
Investing
- "How Changing Global Demographics Could Destroy One of the Most Popular Ideas in Portfolio Management." Bloomberg is good at coming up with eye-catching headlines, but this one is probably more than just an eye-catching headline. (Bloomberg)
- So are hedge fund managers, the perceived alpha generators, really taking bets or are they closet indexers? "Hedge Fund Closet Indexing: 2015 Update" (AlphaBetaWorks Insights)
- "Why Buying Individual Stocks Is a Bad Idea." Not a new idea, but always worth repeating. (GetRichSlowly)
- "Charlie Munger Isn't Done Bashing Valeant." A case when buying the individual stock really, really seems like a bad idea. (Bloomberg)
- "Ackman Answers Munger's Valeant Critique by Faulting Coke." Bill Ackman’s response to Munger. (Bloomberg)
Emerging Markets
- Sorry to be the bearer of bad news, but market consensus seems to remain bearish on emerging markets. "UBS: Emerging Markets Are Entering 'a New and Dangerous Phase' in 2016" (Bloomberg)
- "Moody's Has Two Big Warnings for the World" (Business Insider)
- "ETF Investors Are Unbundling Emerging Markets." We wrote about emerging markets as an alpha opportunity last year. Investors have clearly not been missing out on these. (Bloomberg)
The Soft Side of Business
- Have you been telling interviewers that your biggest weakness is working too hard? Well, read this: "Beware of Humblebragging about Yourself" (Harvard Business Review)
- "Why Bad Guys Win at Work" (Harvard Business Review)
- "Most Bosses Fail Their Employees in One Important Way" (Business Insider)
- Three Harvard Business Review articles in the same section? I promise I won't do it again. "When Treating Workers Well Leads to More Innovation" (Harvard Business Review)
And Now for Some Readings Truly for the Weekend . . .
- "Science v. Intuition: Why Is It Difficult for Scientific Knowledge to Take Root?" (Skeptic)
- "Jet Lag Doesn’t Have to Ruin Your Business Trip." At least this article should give you more hope that it won't. (Harvard Business Review)
- "This Is Your Brain on Exercise: Why Physical Exercise (Not Mental Games) Might Be the Best Way to Keep Your Mind Sharp" (Open Culture)
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author's employer.
Image credit: ©iStockphoto.com/Christian Mueller