CFA charterholders and other professionals who have made the transition to fintech from traditional finance explain why adapting to different work cultures is a critical challenge.


Key Points

  • Fintech has a different work culture and rewards different kinds of personal traits compared with traditional finance.
  • Before career switchers can adapt to a new work culture, they first need to adapt successfully to a different job market and get a position, moves that require new approaches.
  • Academic degrees don’t confer the kind of “global intelligence” necessary for success in tech fields, which includes such qualities as adaptability, awareness, curiosity, empathy, alignment, collaboration, and integration.

Introduction

CFA charterholders and other investment professionals seeking to keep up with innovation and technology find themselves in a fast-moving stream. Career transitions often mean upgrading or gaining new skills and developing a different set of contacts and resources, but the adjustments can also be more profound and personal.

 

A move from traditional finance to fintech might seem to be a small shift because fintech shares many characteristics with traditional finance. Both sectors are equally constrained by regulations designed to protect consumers and facilitate money flows. Both deliver products that serve customers by handling their money or investments and can generate significant wealth for owners and employees. But each sector poses different challenges for professionals because they reward different personal traits and characteristics.

 

Professionals who have made the leap have found that they needed to make some surprising changes. Of course they needed to add new technical skills, such as data science or programming in Python or R, but they also report needing to make shifts in their social and emotional approaches to work and the workplace to succeed.

Personal Changes

Traditional practitioners are driven to the new world by various motives. Some are pulled, and some are pushed. Consider the story of Lowell Putnam, CEO and co-founder of data aggregator Quovo. After graduating from Harvard University with an AB in American history and literature, Putnam spent three years at Lehman Brothers pursuing a dream career in investment banking. Tossed back into the job hunt when Lehman collapsed in 2008, he had a brief stint at Barclays. Because the assured career path he thought he was pursuing turned out to be supremely risky, jumping into a fintech startup seemed possibly even less risky. In 2012, he and two co-founders launched Quovo, an aggregator of investor data for fintech entrepreneurs, financial advisers, and institutions.

 

Right away, Putnam saw that the social skills he had honed in finance were not useful. Technology development depends on openness and creativity, traits that are not normally useful in traditional finance. Software design and development is a team sport that demands cooperation, communication, and team leadership skills to achieve success. When finance and investment management teams meet to discuss ideas, collaboration is not usually the goal. Decisions often go to the winner of a discussion, and decisions by committee are anathema to many firms.

 

Putnam and his co-founders flipped the priorities, putting more emphasis on independent thinking and individual expertise. For example, when pitching investors for their company, he and his co-founders analyzed the audience and switched roles of who talked finance and who talked operations to put the best-matched speaker in charge. He contrasts that approach with his old world. “In general, there’s a rigidity in finance that’s a real liability in tech,” he says. “People in finance have succeeded by doing one thing really well, getting promoted, getting paid better, and getting better and better at that one thing. That makes them single faceted.”

Invent a New Job Strategy

Other newly transitioned fintech workers were pulled by the promise of fast growth and of contributing to a new way of doing things. For Caroline O’Mahony, making the shift to a fintech company somewhat past the startup stage required a new approach. Her outlook and work habits had been formed during her tour through finance at investment firms Merrill Lynch, Värde Partners, and Summit Rock Advisors.

 

O’Mahony joined Addepar, a tech-enabled portfolio analysis firm, as director of product strategy in 2013. Four years after its inception, the firm had $75 billion in assets under management (AUM). In the five years after O’Mahony joined, the company grew to over $500 billion in AUM, and she was serving family offices, wealth advisers, and private banks in roles with increasing responsibilities. Her job titles changed almost every year, from director of product strategy to senior director of product marketing, then vice president of growth, and most recently vice president and chief of staff to the CEO.

 

Her new roles necessitated changes, and like Putnam, she found that the work culture differed from traditional finance. First, she needed to be less an expert in any particular thing and more of a generalist with an understanding of what different functions need from one another. An example is the need to facilitate the direct flow of information from customers and the business side to the product and engineering team so they know what to keep building and what to start building.

 

A second difference was that the accelerated growth rate of a younger company meant rethinking goals frequently. A team cannot make plans to execute a multi-year or even multi-month strategy because changes happen too rapidly. User feedback might motivate the obliteration of the current development calendar and the start of a new list. Young companies may be brought together and set in motion by a shared vision, but the path to realizing that vision is rarely linear. The non-linear dynamic means that employees at early-stage fintech companies must be able to shift among projects and abandon what’s not working on a moment’s notice.

 

Finally, finding her new job demanded changes in her job search strategy. Her regular network of finance colleagues and finance recruiters couldn’t facilitate the move. O’Mahony had to invent a new strategy and broaden her search channels to meet people who knew of openings for fintech jobs. She activated her larger networks from school and professional organizations to find a technology company looking for her skills and background. She was actually surprised to see her method work when she was connected with Joe Lonsdale, who founded Addepar in 2009, and Eric Poirier, who was the new CEO when she joined the firm in 2013.

Know-It-Alls Not Wanted

O’Mahony’s transition illustrates how different the job market is for tech firms. Job seekers need to develop a very different personal “elevator pitch” from the kind that would be used for seeking a position in traditional finance. Traditional finance would be attracted to an Ivy League background, big bank pedigree, published papers, multiple advanced degrees, and proof of considerable expertise shown by promotions or comments that revealed deep knowledge.

 

Fintech wants none of this. Tech firms in general and fintech startups in particular value collaborative workers, innovative problem solvers, and proof of being able to iterate and shift gears quickly. Even learning the meaning of “iterate” is key to being successful in fintech; software is often built in stages, with new features added in response to customer desires. This process of iterating permeates all business processes in technology companies. Fintech companies like to hire people from traditional finance who bring experience with markets and customers, but they find that the know-it-all attitude of experts inhibits growth.

 

Inventing a job search strategy for sector transition might start with a list of recruiters specializing in fintech. Job titles and descriptions won’t be familiar, so a résumé rewrite is next on the list. Also, smaller companies looking for talent might not be able to afford recruiters. But there are other resources, such as AngelList, websites for fintech venture capital firms, or accelerator job posts for portfolio companies. The search in these sources is usually free for candidates. Networking in fintech is different from networking in finance. Many participants at conferences and meetings are young companies, and showing up to pitch means discussing disruptive technologies. There are dozens of opportunities in every major city around the world. In fintech hubs, it’s possible to attend several events each day.

Key Traits for Success

In a World Economic Forum article, former Medtronic CEO and current Harvard professor Bill George points to Jack Ma as an example of the kind of skills needed for global leaders. Jack Ma founded Alibaba in 1995 when he finally graduated from university after many failed attempts to enter higher education. No company would hire him. Starting from nothing in its first year, Alibaba grew to revenues of $23 billion in 2017.

 

Bill George has coined the term “global intelligence,” or GQ, to describe leaders like Ma. To excel on the world stage, George identifies seven elements that support global business growth: adaptability, awareness, curiosity, empathy, alignment, collaboration, and integration. These traits match the new soft skills that Putnam and O’Mahony found so vital in their career moves to fintech.

 

And as Ma’s story demonstrates, academic degrees don’t confer the “global intelligence” that leads to success in tech fields. With the speed of technological change, a single journey through higher education in most fields is no longer the complete preparation for work. The old path from undergrad to masters to PhD to working in some capacity as an expert in the field seems increasingly obsolete or at least inadequate. Demand for technical skills paired with financial knowledge is driving new forms of education, and demand for a flexible and global view of business is driving personal development.

 

That’s not to say education has no value. An investment professional can translate education in investments, modeling, and financial analysis to roles in fintech. But most who make the transition look to increase their value by adding some new technical skills. For example, Putnam developed marketing expertise and even learned to code so he could perform small tweaks to their software without bringing in the developer. Some founders are motivated to add skills to perform all the tasks required of them for their startup to succeed, and others working for fintech study new technical skills to know how to communicate with a technology team. Finance professionals moving to data science learn R and Python as a foundation to using machine learning, even if they don’t do the actual programming.

Daniel McAuley, CFA, manager of data science at Wealthfront, exemplifies the drive for continuing skill development for himself and for the people he hires. While earning his BA in international finance from Arizona State University, McCauley taught himself statistics and programming. Then he earned the CFA designation and finished an MBA program at Wharton. He has finished or is currently taking 20 additional courses on data science from various angles from online providers. And if you want to work for him, you’d better be doing the same. The deciding factor in many hires is whether the candidate is motivated to keep learning.

Other charterholders have seen the need for ongoing education as a business opportunity. Sri Krishnamurthy, CFA, experienced the problem firsthand. As he consulted with financial institutions on how to use MATLAB, he found himself training the permanent staff on how to use what he and his fellow consultants had built. Thus, Quant University, LLC, came into being. According to its website, this independent school offers “customized training courses and workshops for executives to enable them with the tools needed to handle data and implementation challenges when designing and developing quantitative solutions,” culminating in a certificate in fintech and analytics applications.

 

Because “fintech” is a catchall term, it includes a wide range of companies that demand diverse skills. Cryptocurrency and blockchain companies rely on understanding of new programming languages and unique hardware that overheats with rapidly expanding calls for capacity. Payment companies that facilitate cross-border banking demand the ability to organize multiple regulatory regimes and culture-specific user communication. Online lending companies demand an ability to use and trust data from social media accounts that translates into creditworthiness.

 

Some industry watchers predict that the demise of traditional finance roles is inevitable and the only certainty is how long it will take, with estimates ranging from 5 to 20 years. If this expectation is correct, there may be a first-mover advantage because those who move to fintech now will add valuable experience and expertise—before late movers choose to follow.

About the Author

Cynthia Harrington CFA

Cynthia Harrington, CFA, is principal at Cynthia Harrington & Associates, a Los Angeles-based firm that provides executive coaching for investment professionals.

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