Investment professionals urged to be more sensitive to needs of clients, communities

Investment professionals must rethink their business models and fee structures to become more sensitive to the needs of investors especially in a period of slow global growth and relatively lower investment yields, a top official of CFA Institute said.

In a speech delivered during the 20th anniversary of the CFA Chartered Financial Analyst Society of the Philippines, CFA Institute managing director for Asia-Pacific Nick Pollard reminded CFA charterholders that the CFA title was “more than just a designation.”

He said it was also a commitment to align to the highest standards of investment knowledge, competence, professionalism and ethics.

Best outcome

Pollard urged CFA charterholders to dedicate themselves to the best outcome for clients but also work to serve for a greater purpose and the future of the profession and society at large.

“Our profession is at an inflection,” Pollard said, noting some skepticism on how much value investment professionals could provide and how trustworthy they were.

“Our challenge is to reclaim that trust and in doing so, we need to raise the professionalism of our industry to a much higher level.”

As such, Pollard said CFA Institute was focused, among others, on revising business models.

“Even after the (US-led global) recession, even in this era of slow growth, investment professionals still enjoy high operating margins, so it’s no wonder that investors question the value we deliver, the fees that we charge,” Pollard said.

Fair compensation

More than just making a good living for themselves, Pollard said the investment profession would need people who were driven to serve, help clients reach their investment goals and ultimately make a difference in local communities and capital markets.

“While we believe in fair compensation, we need people who are driven by purpose, rather than just by money,” he said.

Likewise part of the roadmap to earn back trust is to be an advocate for candor and transparency, being honest about clients’ investment outcomes and prospects “even when it’s hard news to deliver,” he said.

This will also require taking a clear stand against products and services that put investors at a disadvantage, Pollard said.

Furthermore, Pollard said advocating transparency meant sitting at a table with regulators everywhere. “As a profession, we must earn the right to drive the regulatory agenda and help protect investors… by doing so we reestablish the trust that’s so essential for the future of our business.”

Pollard also urged CFA charterholders to recruit to this profession “the right kind of people” and change the demographics like how diversification was a core investment principle.

If investment professionals would hire and collaborate with people of diverse backgrounds—such as in terms of gender, ethnicity and culture— Pollard said this would enhance and improve performance, in turn attracting new clients.

Poor track record

He added that the investment management industry had a poor track record in attracting women but noted that in Asia, this trend was starting to be reversed.

Pollard said new technologies provided an opportunity to expand the market for investment professionals.

“We must complement and harness, not fight against these because our business is truly about people and relationships and no online platform can provide the value that you can,” he said.

“Technology can help you serve your client more efficiently.”