Future as we know it

50 days into full-time work. A good milestone for reflection. I need to set some goals and think about what the next step should be for my professional development.

Today I attended the future of finance conference back at SOM. The presenter line-up for the conference was phenomenal. If the conference has been in New York, there would be a lot more attendees than the 100ish people in Evans today. Andy Lo’s presentation was outstanding. He presented a vision of a megafund that pool money together to solve some of the world’s most difficult problems in biomedicine. According to Andy, because of risk aversion and the complication of drug development, big pharmaceutical companies are cutting spending on R&D. And the number of biotech VCs in the world is decreasing. This led to decrease in capital resource for breakthrough scientific development for biomedicine, especially for rare diseases or cancer, which are the areas we need the most funding and talent. Although the chance of solving individual problem and developing break-through drugs is low, Andy thinks if we pool enough resources to significantly increase the number of holdings in the portfolio, the likelihood of 2 or more hits in the portfolio can increase to above 99%. If we equip this fund/institute with the best financial and science professional, we can further improve the chance of success and really channel capital towards something meaningful. I think he has a lot of great points, and his vision might one day come true.

Donna Dean, Jane Mendillo and Ashvin Chhabra led the next panel on multi-generational wealth from foundation, endowment and family offices’ perspective. They have great insights on how institutions and individuals should manage their wealth. Ashvin’s breakdown of a portfolio into: safety net, market return and aspirational alpha is definitely worth thinking. Jane’s experience working with Harvard’s stakeholders and dealing with spending cuts through the crisis period is good to hear. And Donna’s comparison of foundation to an expensive retiree that could live forever is a fresh perspective. If I could have any of their wisdom one day, I should be more than content.

Charlie Ellis presented in the afternoon on the retirement crisis. The switching from define benefit to define contribution plan is putting lots of people in danger of shortage of retirement funds. Many people, especially the ones who do not have sufficient financial knowledge, does not understand the importance of saving for retirement from an early age. And the switch of putting the control of retirement into the hands of individuals has already shifted all the risk and responsibility of investing for retirement to individuals. If the average person is not educated on 401(k) and IRA plans and does not start funding, the whole country will soon be in shortage of retirement payouts. And the political system in the US is not helping with solving this issue. At some point, there will be a group of people, many low income citizens who cannot afford to retire at 65. This is probably also the group that needs the most medical care and worked the most in sunset years. Once this group is large enough, the country has to find a way to solve this problem. Worse yet, the United States is not the only country with an aging population. Most of western Europe, Japan, Asian tigers and China are also facing similar hurdle in retirement funding.

Back to where I am today. I enjoy the field I am in. Investing with a socially responsible lens is the field I want to dedicate most of my career to. Unfortunately most employers today do not offer systematic training from day 1 anymore. Most of the learning is done through outsourced vendors and learning on the job. I am glad I passed the CFA level II and series 7. The next in line is series 66 and CFA level III. From a technical standpoint, I need to familiarize myself on FactSet and MorningStar Direct more. I should probably set some assignment for myself, given the extra time I have when my manager is traveling.

I should also continue to build contacts and network in the impact investing field. This is the only way to grow my knowledge and potentially find good investment opportunities for the firm. I should re-visit this from time to time to make sure I am on track to get to know more people. I am still not sure where I should be to make the most use of my knowledge and create the most impact. Large financial institutions are great in having the capital to make changes, but they also have constraints on what they could get into.

I hope I can be more disciplined in learning and development, building good relationships with people and continue to do good work. Since my manager is not always around, I need to be more self-motivated. Let’s see what happens in the next year and where this career takes me.

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