[cmbaus]

I've spent most of my career servicing the financial services and investment industry. While I've enjoyed much of it, I also found a lot of it surprising to say the least.

What many people in finance haven't realized is most of the industry is an IT problem. Much of the work I see involves ingesting data, analysing it, and reporting on it. Most everything else is sales.

Most of the people doing this work come from a finance background and only have a rudimentary understanding of IT or programming. Many know Excel and PowerPoint pretty well, and those tools are pushed to extremes.

The work I see being done by junior analysts is often manual IT work. You wouldn't believe what goes on behind the scenes assembling the statements and reports that are sent to clients. It can be surprisingly difficult to sell software in this environment, because many stakeholders would rather get another junior analyst than solve the problem with software. There are some enlightened firms when it comes to technology, but I would say that is the exception.

Ultimately what I think is going to happen is that companies that are built from the ground up around a technology infrastructure will become more efficient and win business from traditional companies. It will take a long time to displace the bigger players, but it will happen. WealthFront is a good example of a financial company that is built around technology. Eventually these types of firms will win out in the market.

Update: Here is an example of the type of work I see analysts doing:

Manually copy data from 5 different systems into a spreadsheet at the end of the month. The data always has flaws, so go back and validate the data and resolve the issues. When the data is clean, do some processing on the data in the spreadsheet and create some graphs.

Then cut and paste output from the Excel spreadsheet into 150 client PowerPoint presentations, and combine that with commentary saved in an Word document from another department that is stored on a network drive.

At the end of the month an analyst will work 80 hour weeks to complete this in 3-5 business days. This type of workflow is not uncommon.

[maqr]

The cynic in me wonders if the inefficiency and inaccuracy that comes with using humans to crunch numbers gives them more room for error. It's pretty hard to pressure a computer to make the numbers work in your favor, but it's pretty easy to push a low level employee to do something unethical.

[cmbaus]

It might happen, but at least in the segments of the industry I work in, I don't think it is common. What is more common is human error. Most of the businesses I deal with are highly regulated, and they wouldn't risk fudging the numbers. In fact much of our business these days is related to enforcing compliance regulations.

If you knew how dirty most financial data is when it is released, you would probably be checking your statements more carefully.

[eru]

Oh, a certain level of human error amounts to the same thing as fudging. Because only errors in the unwanted direction will be chased.