Plenty of blame was cast for the financial crisis of 2007-2008, but finance education and training has hardly been blameless – this is the argument of Simon Taylor, University Lecturer in Finance at Cambridge Judge Business School.
A “standard set of finance concepts and tools” have been used to train people in the finance industry for decades, but many of those are based on very shaky foundations, Taylor told an audience in Mumbai on 28 January.
“We have to make students aware of what is known, but also how limited, fragmented and tentative that knowledge is,” Taylor says, urging that several elements should become standard fixtures in the education of financiers and others entering the investment industry.
They include a broad knowledge of history (not only the dates of financial crises but “turning points” in the development of modern financial products and macroeconomic theory); an emphasis on the limitations of traditional models of economic decision making, by looking beyond behavioural finance to other factors such as system dynamics; and lessons on just how provisional all financial knowledge really is, so finance professionals “don’t blindly apply something on the assumption that it always yields precise results.”
Taylor acknowledged that “every syllabus is finite,” so adding these elements may mean that other concepts are left out of a finance education. Programmes must strike a fine balance in order to become “more sceptical and pragmatic without undermining their students’ confidence in finance completely.”