“If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.”
Antoine de Saint-Exupery
The investment industry is today very immature in its human capital management, with high turnover, minimal succession planning, and a strikingly homogeneous work force. As founders age and investor demographics change, the established investment firms will face a how to attract, develop and retain talent. “Purpose-driven companies,” says Jeff Hunter, CEO of Talentism, “are more likely to have employees who exhibit cohesive behavior and act in the best interest of the company and the investors.” Thus, we foresee a professional CEO role emerging in asset management: She will be fully focused on leadership as distinct from the traditional CIO and VP of Sales. It’s worth noting that some of the leading asset management firms, including D.E. Shaw and Blue Mountain, are leading the way by being very proactive and mindful about managing their culture and principles.

The Jobs To Be Done in Asset Management

\label{the-jobs-to-be-done-in-asset-management} Christensen popularized the idea of analyzing a company by looking at the “Jobs to Be Done” needed by its clients. Most money managers think their main job is returns, but they are wrong. According to Amanda Tepper, CEO of Chestnut Advisory Group: “contrary to conventional wisdom, investment performance alone does not drive asset flows. While there is a clear relationship between the two, investment performance accounts for only about 15% of the reason for placing money with managers. We found (very low) correlations between trailing three-year returns (the primary metric most institutional investors follow) and subsequent one-year net capital inflows.” Managers will still have to cover the basics like meeting return expectations at the right risk levels with the proper internal controls (the technical jobs to be done). The true opportunity set, however, lies in connecting deeply with investor needs (their functional and emotional jobs to be done). The winners in asset management need to provide targeted customization at scale (a functional job). See Picture 8 for a summary, and see