New future-focused masteral program promises to help students navigate the nexus of finance and technology
Kodak. Ericsson. Blackberry. Dell. All iconic companies, all former heavyweights in their respective sectors – with heavy emphasis on “former.” And according to Ryan Riordan, Distinguished Professor of Finance at the Smith School of Business in Queen’s University, the professionals who make up Canada’s wealth industry are in danger of suffering the same fate.
“You see lots of examples like that,” Riordan told Wealth Professional. “They were all pioneers who were unable to see that things have been disrupted by technological shifts, and even if their business is still partially profitable, it’s not going to be that way forever.”
In the case of the financial industry, Riordan pointed to the massive shift toward digital delivery of financial services, which is now enabling “everyone and their grandmother” to conduct online transactions comfortably at home on the device of their choice. Depending on what trends you pay attention to, that shift goes as far back as three or four years ago, though how those changes would ultimately shape markets was unclear at the time.
“Now I think we have a relatively good idea of which aspects of digital financial services are here to stay – and how they’re likely to move forward,” he said.
Developing dual expertise
Based on that awareness, the Smith School of Business has developed a first-in-Canada program aimed at working professionals who want to build future-proof careers. Slated to begin in November, the Master of Financial Innovation and technology program promises to give graduates a robust education in the overlapping fields of finance, data science, and machine learning technologies through 12 months’ worth of evening and weekend classes.
Riordan, who is also the director of the new program, said it was designed to help financial technology companies that have traditionally had to choose between candidates with strong finance backgrounds and those with tech backgrounds. Aside from the technical skills in finance, the MFIT program helps students cultivate essential technical and quantitative programming skills.
“At the Smith School of Business, we have a masteral program in analytics that covers machine learning and data science,” he said. “We also have a Masters of Finance program that teaches the fundamentals of finance. So we’re able to combine elements from those two programs, and include courses discussing specific subjects of interest like cryptoeconomics, automated investing, and digital capital markets.”
The final menu of courses was developed based on feedback from a chorus of prominent voices in the financial industry, including representatives of Toronto Financial International (TFI), the Global Risk Institute, and the Bank of Canada. There was also an external review process wherein two professors from other universities – both experts in financial technology – provided input on what courses should be offered and what learning activities should be included.
“I think this program is the first one to recognize that you can't just have technology skills or just finance skills to be successful in the future,” Riordan said. “You'll need to have both.”
Forging the wealth industry of the future
Right now, professionals in the wealth industry are facing a host of disruptive technological risks, the most prominent of which are robo advisors. Many in the industry have been quick to downplay that competition, with some diplomatically saying that robo advisors have their place in the market. But from where Riordan sits, robo wealth advisors – the ones equipped to offer higher-value advice like tax planning – are bound to displace traditional firms that stand still.
“In every industry, digital disruption starts with the easiest, low-cost product or service, then it moves up the quality chain,” he said. “I think it’ll be the same with wealth advisors. They can say ‘I still have high-net-worth clients’, then ‘I still have ultra-high-net-worth clients.’ At some point, that top end of the market will get too crowded; the pie isn’t growing.”
The role of tech savvy in satisfying clients is also becoming clearer. Younger clients with questions about cryptocurrencies may not be satisfied with advisors who quickly write them off as ultra-niche, speculative investments or scams. Retirees may entrust a large portion of their nest egg to an advisor with a winning investment strategy, only to end up losing a significant chunk to slippage from inappropriate execution. Those are the types of problems that the MFIT program wants to help its students take on.
“Aside from typical finance training, we give them the machine learning and data science training they need to draw insights from data about their clients as well as the markets,” Riordan said. “We also teach the students about automated investment models, and how they can do portfolio optimization that goes beyond the old mean-variance approaches, and includes idiosyncrasies like age, family size, and current income, just to name a few factors.”
Beyond that, the course also helps students become more familiar and comfortable with cutting-edge fintech trends. Aside from the potentially increased role of AI to drive investment decisions, there’s the accelerating use of platforms to connect entrepreneurs in need of capital directly with investors who might want to bankroll them as stakeholders or creditors. And with the increased incidence of crypto scams and rising need for fraud detection, Riordan maintains that an awareness of how crypto assets and distributed ledgers work will be vital for the wealth practice of the future.
“Even if you’re a 60-year-old advisor planning to retire and exit in five years, I think this is something you should consider preparing your practice for,” he said. “If you only have older clients, and if you’re not equipping it to address younger clients and their needs, you’re drastically eroding the future value of your business.”
