Building a stronger, more trustworthy investment management profession requires bold leadership and a renewed commitment to the highest standards of practice.
CFA Institute has led investment management education and industry standard setting for over 50 years. Our members are bound by a professional code of conduct and are disciplined accordingly.
Any of our 125,000 CFA charterholders worldwide, will tell you they add the CFA designation after their names because those letters represent a proven understanding of investment management, commitment to ethics, and always putting clients’ interests first. All of which contribute to the integrity and credibility of their organisations.
For these reasons, CFA Institute recommend three critical actions that firms, investment professionals, educators, regulators, and investors can take to help build the investment profession and deliver value for investors.
1. SET HIGH STANDARDS OF ENTRY AND PROFESSIONALISM
Educators: Develop curricula that equip future investment professionals with financial competence, including technical skills, knowledge, and ethics, as well as a broad perspective of the investment management industry’s essential role in serving society.
Firms: Employ those investment professionals who commit to premium standards. Invest in their continuous learning and development. Publicly attest to the need for high standards of conduct as the foundation of a sustainable and profitable industry.
Regulators: Demand standards of competency and ethics for investment professionals. Require professional credentialing to practice in the industry, such as the CFA charter. Recognize the value of a rigorous educational program and ethical standards to shape a more stable and effective financial system.
Investment professionals: Join a professional membership association. Become actively engaged to support a strong, self-regulating profession that has a body of established knowledge, sets standards of competence and conduct, and disciplines its members who violate an ethical code. Take responsibility to stay current in your professional knowledge.
2. CREATE BUSINESS MODELS GEARED TOWARD ACHIEVING INVESTOR OUTCOMES
Firms: Abandon short-term, product-pushing business models. Build a culture that rewards client-centric thinking and doing the right thing, even when it isn’t easy. Be transparent about your fees. Align your incentives with those of your clients. Create products that will benefit your investors more than your firm and employees.
Investors: Take the time to find the right firm to achieve your goals. Investigate if the people managing your money have the training, experience, and ethical standing to merit your trust. Do a background check through a regulator database and check references. Don’t underestimate the influence you have to shape the investment profession, and have high expectations of those you hire.
Regulators: Impose stricter standards of prudence, loyalty, and care on all firms offering client investment advice. Recognize those who adopt voluntary standards, such as the Asset Management Code of Professional Conduct and Global Investment Performance Standards.
CFA Institute advocates for client-centric business practices through our global Putting Investors First initiative and codes and standards.
3. STRENGTHEN REGULATIONS THAT ALIGN FIRMS AND CLIENTS
Regulators: Enhance enforcement mechanisms, and promote fairness in regulation across markets. Work with the industry to encourage investment practices that enhance investor safeguards and market integrity. Keep pace with new investment products and services to ensure they are serving investors.
Firms: Hold yourself to a higher standard than what is required legally. Adopt internal codes and procedures that extend beyond the letter of the law and box-ticking exercises. Do not engage in lobbying that will harm your clients.
Investors: Hold your investment professional and his/her firm accountable. Report complaints for violations of securities laws or regulations, including fraud and unfair treatment.
CFA Institute staff and members serve in influential roles with various regulators, government agencies, and standard-setting bodies globally. We partner with our member societies to develop relationships to improve the functioning of markets around the world.
CFA Institute - A Difference That Matters
For investment professionals, the CFA charter differentiates your attractiveness in the marketplace by signaling your professional status and mastery of the skills that are most needed for investment analysis and decision making in today’s ever-evolving and competitive global financial industry.
Investors want advisers they can trust who have their best interests at heart. They expect greater transparency and communication, especially during periods of market volatility. Increased levels of care are particularly acute during downturns. And, in this digital age, a lack of reliable security measures to protect their data can be cause to find another adviser.
In short, investment managers who truly want to differentiate themselves from the competition will need to do much more to demonstrate their value proposition. As stewards of other people’s money, investment managers have a deep responsibility to be good fiduciary managers and ethical participants in the financial markets. CFA Institute, as an advocate for best practice in the investment profession, offers tools and resources to meet this responsibility.
It is incumbent upon us to listen to what investors are telling us they want and ensure that our profession continues to evolve to earn their trust. Then we can do what we do best – help them to achieve their investment goals.