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2023 Curriculum CFA Program Level I Portfolio Management and Wealth Planning


The meeting of finance and technology, commonly known as fintech, is changing the landscape of investment management. Advancements include the use of Big Data, AI, and ML to evaluate investment opportunities, optimize portfolios, and mitigate risks. These developments are affecting not only quantitative asset managers but also fundamental asset managers who make use of these tools and technologies to engage in hybrid forms of investment decision making.

Investment advisory services are undergoing changes with the growth of automated wealth advisers or “robo-advisers.” Robo-advisers might assist investors without the intervention of a human adviser, or they might be used in combination with a human adviser. The desired outcome is the ability to provide tailored, actionable advice to investors with greater ease of access and at lower cost.

In the area of financial record keeping, blockchain and distributed ledger technology (DLT) are creating new ways to record, track, and store transactions for financial assets. An early example of this trend is the cryptocurrency bitcoin, but the technology is being considered in a broader set of applications.

This reading is divided into seven main sections, which together define fintech and outline some of its key areas of impact in the field of investment management. Section 1 explains the concept and areas of fintech. Sections 2 and 3 discuss Big Data, AI, and ML. Section 4 discusses data science, and Sections 5–8 provide applications of fintech to investment management. Sections 9 and 10 examine DLT. A summary of key points completes the reading.


Learning Outcomes

The member should be able to:

  1. describe “fintech;”

  2. describe Big Data, artificial intelligence, and machine learning;

  3. describe fintech applications to investment management;

  4. describe financial applications of distributed ledger technology.


  • The term “fintech” refers to technological innovation in the design and delivery of financial services and products. 
  • Areas of fintech development include the analysis of large datasets, analytical techniques, automated trading, automated advice, and financial record keeping. 
  • Big Data is characterized by the three Vs—volume, velocity, and variety—and includes both traditional and nontraditional (or alternative) datasets. 
  • Among the main sources of alternative data are data generated by individuals, business processes, and sensors. 
  • AI computer systems are capable of performing tasks that traditionally required human intelligence at levels comparable (or superior) to those of human beings. 
  • ML seeks to extract knowledge from large amounts of data by “learning” from known examples and then generating structure or predictions. Simply put, ML algorithms aim to “find the pattern, apply the pattern.” The main types of ML include supervised learning, unsupervised learning, and deep learning. 
  • Natural language processing (NLP) is an application of text analytics that uses insight into the structure of human language to analyze and interpret text- and voice-based data.
  • Robo-advisory services are providing automated advisory services to increasing numbers of retail investors. Services include asset allocation, portfolio optimization, trade execution, rebalancing, and tax strategies. 
  • Big Data and ML techniques could provide insights into real-time and changing market circumstances to identify weakening or adverse trends in advance, allowing for improved risk management and investment decision making. 
  • Algorithmic traders use automated trading programs to determine when, where, and how to trade an order on the basis of specified rules and market conditions. Benefits include speed of executions, lower trading costs, and anonymity. 
  • Blockchain and DLT might offer a new way to store, record, and track financial assets on a secure, distributed basis. Applications include cryptocurrencies and tokenization. Additionally, DLT could bring efficiencies to post-trade and compliance processes through automation, smart contracts, and identity verification.