Morningstar - Q4 2020 - 10

Dispatches

Diversity of Thought
A postpandemic
world demands multidimensional thinking.
PHILLIPS CURVE

Don Phillips
Crises like our current pandemic can bring
radical change, but the more common outcome
is simply an acceleration of trends already
in motion. We are seeing that in education, and
the trend has serious implications for the
future of financial services.
The soaring cost of college education has
forced many young people (and their parents
footing the bill) to prioritize the most readily
marketable skills. Demand for training in "practical"
skills like science, technology, and business
continues, while "softer" fields in the humanities
languish. Not only are there fewer humanities majors today, but we're witnessing a broad
loosening of liberal arts requirements for all
undergraduates. Now, thanks to the pandemic, we
see whole humanities departments being
cut at major universities and many small liberal
arts colleges facing extinction.
The preference for skills that earn a quicker
payback is understandable but misguided. Studies
show that in the long run, students with strong
backgrounds in the liberal arts do fine. It's not that
studying humanities is superior to studying
STEM or vice versa. It's that a combination of skills
is most potent. This is the same reason that
diversity in groups leads to better decisions.
An English major who goes to work in a business
is likely to acquire specialized knowledge of her
field over time, giving her a diverse set of talents
to advance her career. Many employers
even supplement the cost of pursuing an MBA or
acquiring programming skills. An engineering
graduate, however, is far less likely to pick up close

Morningstar Q4 2020

reading or other humanities-based skills on the job.
After all, how many corporations promote
Great Books classes to their employees, much less
pick up the tab should the employee desire
to pursue a master's in philosophy? As a result,
over time the humanities majors become more well
rounded, while those with the more immediately
applicable skills remain focused on one skill set.
The combination of left- and right-brain skills
(or STEM and humanities) leads to more insightful
and creative thinking, the kind the financialservices industry needs. It's no accident that in
financial planning, the independent advisor
channel has been one of the fastest growing and
most successful in all of finance. Look where
these advisors came from and how they
have evolved. Many started with a set of hard
skills-such as accounting or investment
analysis-but the profession has made a
concerted effort over the past two decades to
complement this knowledge base with the
development of the softer skills of psychology and
behavior modification. As it has done so, the
profession has thrived.
Such a shift is only possible with overt effort and
education. Fortunately, financial planning is
one of the professions with a firm commitment to
continuing education. Advisor conferences
that were once dominated by investment
education now focus on client behavioral issues.
These newer skills have become central to
the planning profession and have strengthened
the bond that advisors have with clients
and improved the service they deliver. The model
of these independent advisors is slowly
filtering into other parts of finance, particularly
financial tech applications, and the field
of financial services will be the better for it.
The pivot from one-dimensional to multidimensional thinking is one we must make more
broadly in our society. If our universities are
turning out more one-dimensional job applicants,
the challenge for the successful corporation
of tomorrow gets even greater. It is imperative that
companies seek and develop diverse skills
in their employees. Firms with armies of employees
who all view the world through the same
lens will be increasingly vulnerable to those

whose thinking better mirrors the diversity of the
clients they serve.
Multidimensional thinking will become even
more important in a postpandemic world. This
crisis teaches us all that we shouldn't
compartmentalize. What happens in one country
affects those on the other side of the world.
What companies do affects not just their
shareholders, but their customers, their employees,
their communities, and society as a whole.
The pressure on corporate leaders to shift from
a shareholder-only point of view to one
that incorporates a broader group of stakeholders
is already growing. We are an interconnected
community with diverse voices that need
to be heard. The successful leaders of tomorrow
will not only assemble more diverse teams,
they will specifically seek out individuals who
internally bring a greater diversity of talents, those
who dedicate themselves to continuous
improvement and embrace lifelong learning.
Wise employees will take up this challenge
and seek to diversify their skills. We need to think
of education not as something you do once in
order to get a job, but as something you continue
to do as you grow so as to craft a rewarding
career. If you studied liberal arts in school, explore
developing your finance, marketing, or computing
skills. If you studied computer science,
make time to read War and Peace, study Nietzsche,
or view the films of Akira Kurosawa. Success
comes from bridging divergent paths,
not from simply choosing the seemingly more
advantageous one.
The world today needs not only external social
diversity but also more internal mental
diversity. Those who look at only one side of an
issue will never see the full picture. K
Don Phillips is a managing director with Morningstar. He is
a member of the editorial board of Morningstar magazine.

Morningstar - Q4 2020

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