From changes in compliance and tax regulations to new investment strategies, vehicles, and client demographics, there are many disruptive forces facing today’s investment professionals.

In this white paper, William Blair partner and portfolio manager Stephanie Braming outlines four key forces driving change among professional investors, noting that not only is change good, it is also required to remain relevant. The first force is the impact of increased regulations, especially in the areas of compliance, tax laws, and retirement savings. The second force is the vast expansion of nontraditional investment strategies and the increasing potential for new nontraditional industry players. The third force is the global shift in wealth. And the fourth disruptive force is the evolution of investor objectives.

According to Braming, these challenges mean that consistent alpha generation for investment firms is paramount—requiring innovation at every level, from the investment process to business models and distribution. Combining an unwavering philosophy with a dynamic process is the key to long-term success, she notes, and achieving that requires continuous introspection. Investment firms need to reassess their business and distribution models and ask questions. What are the core strengths of the firm, and how can we capitalize on them? How do teams interact with each other, and is there a better way? How do clients communicate, and how can we partner with them?

Braming also explains that alpha generation requires leadership—leadership in the culture of the organization, in technology, and in human capital. She notes that attracting and retaining high-quality, team-oriented, and curious investment professionals is essential, and to do that, investment firms need to expand the opportunity set. Numerous industry studies have shown that diversity in backgrounds, life experiences, and gender/race contribute to better investment decisions. According to Braming, the imperative for diverse teams must be initiated by the organization’s leadership but implemented organically with each team internalizing these initiatives.