To accomplish that, they need to study a certain number of hours per week. This means that engineers, medical doctors, and finance professionals need to keep up with the state of knowledge in their discipline to stay relevant in their work. The Half-Life of Financial Knowledgeĭerived from nuclear physics, the half-life of knowledge concept describes the time it takes for half of the knowledge in a certain field to decay or become obsolete. Why? Because of the half-life of financial knowledge. Such change is effortful and thus difficult and painful at times, but it is the best way to achieve innovative specialization.įinance professionals have no shortcut to innovative specialization other than empowering their individual decision making. Individual decision makers must be empowered through directed change in order to resiliently focus on most evidence-based decisions. Innovative specialization requires going beyond lip-service, fee reduction, and digitized me-too products. These popular phrases might appeal to venture capitalists (VCs) during elevator pitches and are easy to cite, but do they make investment professionals truly walk the walk of innovative specialization? They all must consider how to meet their investment and career objectives as digitization-driven margin pressure, the asset management industry’s oligopolistic tendencies, and regulatory requirements that encourage standardized services push asset managers and asset owners in a direction they have thus far avoided: developing a comparative advantage through innovative specialization.īoard rooms, media publications, and consulting pitches are thus full of VUCA buzzwords like change management, agile organizations, self-optimization, mindfulness, and artificial intelligence. Professional investors face the same challenges across asset classes, strategies, and geographies: “We know less than we are willing to believe, while applying less than we know.” - Markus Schuller Buzzwords vs. Posted In: Behavioral Finance, Economics, Future States, Leadership, Management & Communication Skills, Philosophy, Portfolio Management, Risk Management
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