Investment management “needs more purpose”

More than 90% of investment professionals globally say they are demotivated with only about a half feeling passionate about financial markets.

Researchers from the CFA Institute and a State Street “think-tank” said individuals and the firms they work for need to have a greater alignment of “purpose, habit and incentives”, which is termed “phi”.

According to the researchers, maximising phi among investment management professionals may be one of the “most promising ways of creating value and trust in the industry”.

It is claimed that phi has a statistically significant and positive link to broad performance measures, including client satisfaction and employee engagement, that can sustain the industry and “drive client satisfaction for decades to come”.

The researchers found just over half (53%) of the investment professionals surveyed said they pursued a career in investment management because they were passionate about financial markets, and 40% said it was an important reason they stayed in the industry.

Just 28% of respondents said they remain in the investment management industry for the purpose of helping clients achieving financial goals, and only 5% to contribute to economic growth. 

CFA Institute and State Street’s Center for Applied Research carried out the study of 7,000 investment professionals.

Rebecca Fender, head of the Future of Finance initiative at CFA Institute, said: “Phi is the variable that’s been missing for too long from the investment management ecosystem.”

“By focusing on phi, investment professionals won’t merely restore balance to our industry, they will make it easier for everything within our ecosystem to find new ways of flourishing, new ways of capturing alpha.”

©2016 funds europe

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