Back to School: Using Academia to Unlock Financial Success
In an era of technological disruptions and evolving global dynamics, academia continues to play an indispensable role in guiding the financial and investment industries towards responsible, sustainable, and successful outcomes
After recently dropping my daughter off at college, I was reminded how important our universities are. Not only do they provide our youngsters with a journey that helps equip them to become productive members of society, but universities and academia also bring us myriad important advancements – from lifesaving medicines and procedures to life changing technologies like computers and the internet.
Similar to engineering and medicine, academia has also provided us with some of the most important breakthroughs in finance and investing. While these sectors are frequently associated with fast-paced markets and high-stakes decisions, their foundation rests on the bedrock of rigorous academic research. This is why large institutional investors often engage with academia; to learn the latest advancements that can help them earn a substantial advantage, especially compared to individual investors. What are some historical examples of this?
Academic research has led to the development of the modern portfolio theory and the capital asset pricing model which are essential in how assets are priced, and money is made in financial markets: for example, two 6% returning investments cleverly combined can generate 8% of return.
Most recently, academia has played a key role in the realm of Environmental, Social, and Governance (ESG) investing. As the world grapples with pressing challenges like climate change, social equity, and ethical governance, academic research has emerged as a guiding light to demonstrate through studies that ESG considerations are not just ethical imperatives, but also financially prudent choices. For the interested reader, I wrote an article this past year for Harvard Business Review that discusses it more deeply.
In an era of technological disruptions and evolving global dynamics, academia continues to play an indispensable role in guiding the financial and investment industries towards responsible, sustainable, and successful outcomes.
Like my daughter, I too am going back to school this Fall, teaching graduate students at Columbia University how to integrate ESG, finance, and politics to create better outcomes, both financial and non-financial. My hope is that this course will help cultivate future leaders and prepare them to navigate the ever-evolving financial landscape, while instigating positive impacts both within their organizations and society at large. And another win for academia!
Dr. Dylan Minor is the Chief Strategist and founder of Omega Financial Group in Santa Barbara. He has held professorships at Northwestern University and Harvard University. Currently, he is faculty at the Anderson School of Management (UCLA) and Columbia University.