Every year, investment firms spend millions to support and improve their firm’s ability to accurately research potential holdings, account for their investments, analyze returns, and report investment performance to attract new investors. Yet on average, most US firms spend $1,273 annually per employee to train new hires, according to the Association of Talent Development’s research. At times that training is determined by human resources or upper management who are not directly involved in the daily business activities of their staff.
While consulting investment management clients, I often hear of business analysts and operations staff who don’t fully understand the basic fundamentals of the investments that are held by their firm or couldn’t calculate the accrued income of a corporate bond or equity dividend. If you only train employees to push buttons and slide slot A into slot B, then your firm will only reap what it sows. Investment firms need to spend more time building their foundation and investing more in their employees to ensure a skilled workforce meets their current and future staffing requirements.
Investopedia defines Human Capital as, “the quantification of the economic value of a worker's skill set. The concept of human capital recognizes that not all labor is equal and that the quality of employees can be improved by investing in them; the education, experience and abilities of employees have economic value for employers and for the economy as a whole.” Many investment management firms provide training in leadership, compliance, project management and technical skills, which is excellent, but firms should also focus on providing foundational training on the increasingly complex financial instruments in which they invest. Use your leadership and project management skills to create an environment which empowers operations personnel to move beyond the simplistic pushing of buttons to a deep understanding of your business.
By defining a training roadmap for your employees that is informational, challenging, rewarding and fun, you can increase your firm’s human capital. Send your best and brightest with the ability to share knowledge and communicate well with others to external training classes. They can also use this newly gained knowledge to train others during formal classes or informal information sessions. Have your most experienced and knowledgeable personnel conduct monthly brown bag lunches for employees on various topics such as how income is accrued and calculated on typical instruments and how this activity is reflected in your accounting system. Ask your firm’s investment professionals to conduct a presentation on the benefits of certain derivatives in an investment portfolio or host a quiz bowl after your training sessions and reward winning teams with game tickets or a gift card of their choice.
Invest not only in projects, systems and data but in the human capital of your firm. Your foundation will only get stronger and an educated workforce is better prepared to meet the future demands of your firm.