Investment Management and Technology: Past, Present, and Future

Abstract

This paper reviews and analyzes how the practice of investment management has been affected by advances in finance theory, market innovations, and technological progress. The first section presents an overview of the development of capital markets and financial institutions since 1950, and the next section makes some predictions about trends for the future. It argues that over the next few decades, as retirement-income systems around the world make the transition from "pay-as-you-go" social security to self-directed retirement accounts, the investment-management business is likely to undergo a radical transformation. There will be growing demand for customized, integrated investment and insurance products, and financial engineering will play a pivotal role in meeting this demand. The final section draws some implications of the analysis for the role of government in overseeing and facilitating the transformation of both the retirement-income system and the investment-management business.

Note: This is a description of the paper and is not the actual abstract.

JEL Classification: G19