Wall Street has been a recurring subject in our current presidential campaign, and not in a good way. It should be otherwise.
The campaigns of both major parties have started a national conversation about opportunity and economic justice, and at the center of that conversation should be Wall Street. But not without a change in the kind of talent financial-services attracts and nourishes.
Here is our world in 2016: Western economies are getting older, and for too many people the idea of a secure and stable retirement is proving illusory. Young people are beginning their careers heavily in debt, expectations already diminished.
Among the world’s poorly educated there is a seething sense of inequality and disenfranchisement. Oh, and the planet is getting hotter.
Meanwhile populations everywhere are gravitating toward cities, bringing all these worries with them. These are society’s burning platforms, and they could represent the next great evolution in capital finance.
But quick: Name a big idea from the financial-services industry in the past five years. Don’t feel bad. There’s good reason Wall Street and the “disruption” cliché are not usually mentioned in the same breath.
Cultural and social changes are coming that will make the future of money unrecognizable to us. There is a business opportunity in this but Wall Street’s senior leadership is late to embrace it.
When no one wants a hedge-fund manager, when no one needs an investment manager or for that matter even a bank to do what an algorithm can do, what new business will be created in which financial services play a role that no one else can play? I’ve not heard it mentioned.
Like all industries in which leadership has enjoyed a long incumbency it is hard for Wall Street’s senior executives to imagine a world substantially different from the one that’s worked so well for so long. Their job, as they understand it, is to manage risk, make traditional financial tools more efficient and improve profitability.
If that is your perspective then the application of artificial intelligence to financial services counts as a breakthrough. Plus it’s so much cheaper than actual talent.
One day soon artificial intelligence will eat traditional financial services. But technology without wisdom leads to danger and, potentially, chaos. Technology must be married to wisdom. And wisdom is a human thing.
It stands to reason that, as an advisor on talent acquisition and retention for the financial industry, I am inclined to understand this blinkered understanding of talent as a consequence of the trend inside many firms to look at talent acquisition as expensive and unpredictable.
An unintended consequence has been a perspective on talent that bears more resemblance to a procurement function than to strategy. What’s lost is a detached perspective on where the world is going.
It is hard to think of many Wall Street firms with a proper competitive-intelligence unit. Such a unit could provide the peripheral vision needed for 360-degree insight into the way our world relentlessly and unpredictably transforms, with all that means for the business.
Without that peripheral vision, without that sense making, harbingers of great change tend to be regarded as single-impact events, uncoupled from talent strategy. Hiring itself is viewed as a single-impact event. On the contrary, the cultivation of great talent is an 18-month to two-year cycle. Sometimes I have the impression that most firms regard it as a two-week cycle.
As you’d expect, firms tell me all the time that people are their biggest asset. In my decades of experience I have seen small correlation between the talk and what actually happens. Look at HR departments, which ought to be included in every aspect of strategy development. They are, at best, a utility for tactical response.
If leaderships are ignoring the new criticality of talent then so are their boards. In my working life I have never met anyone on the board of a Wall Street firm who holds the “talent portfolio” and matches it against the way the world is going. Talent is not a subject of discussion at the board level, except in respect to how much it costs.
Among the most creative people this is a surprisingly small world. Word gets around. More and more, among the most inventive Wall Street is talked of as a graveyard for careers.
Attempts to graft Silicon Valley’s genius to financial services with expensive hires have fizzled notoriously. Recruits from the Valley miss not just the old culture but the creativity of their former jobs.
Meanwhile new college graduates, natives of the new world order, show declining interest in starting careers in financial services.
Perhaps they remember the last time Wall Street was associated with the word “disruption”, in 2008, and what that disruption did to their parents’ lives. New talent wants nothing to do with it.
Some argue that the redistribution of talent to other industries and away from financial services is a good thing for society. I understand the argument, but I think it’s a net loss.
In any industry the Elon Musks and the Henry Fords are one in a million. The rest of us need the collective invention of an organisation to do great things. On Wall Street those great things are still unimagined.
The industry is at a fascinating moment in its history, when its significance might develop in unprecedented ways — but only if it has a new kind of talent suited to a new kind of world.
Richard Stein is chief growth officer at Options Group in New York.