From the 65th CFA Institute Annual Conference in Chicago, John Rogers, CFA, President and CEO, called today for all investment professionals to restore trust in the investment industry. Below is a transcript of his remarks.
We’re about to enjoy a great day of investment insights, and fellowship with new and old friends. But first thing this morning, I want to carve out a few minutes to talk about what we can do to restore trust in our profession. Now, I promise this won’t be as bad as retaking a CFA exam!
This year, we are celebrating the 50th anniversary of the CFA Program. Let’s remember that our history is one of bold, brave men and women who had the vision and backbone to speak and to act. These trailblazers took personal responsibility for the young profession. They created the Chartered Financial Analyst Program and they established our code of conduct and standards of practice. That was 50 years ago this year. A new profession was created, and it flourished.
But today, the truth is that our profession has lost much of its good standing and public respect. There has been a marked and prolonged period where our industry has forgotten what it takes to maintain the trust of clients, regulators, and the public as a whole. I believe that the investment profession stands at a fork in the road. Ladies and gentlemen, it’s time for each of us to take personal responsibility and act to move our profession and industry onto the higher path. Now is the time for action.
The painful truth is that people don’t trust financial services. The Edelman Trust Barometer of the public’s confidence in professionals, reports that banks and financial institutions are the two least trusted sectors globally, with less than half of responders saying they can count on these institutions “to do what’s right.” More than three-quarters of people responding to a recent CNN poll said financiers are greedy and overpaid, and two-thirds said they’re dishonest. In his new book “Stewardship,” John Taft illustrates, through the use of this word cloud, the public’s views of Wall Street. Not a pretty picture, is it? It’s no wonder that Occupy Wall Street became a viral, worldwide movement last year for many fed up with economic misery and the feeling that the game is rigged.
Members of CFA Institute feel strongly about this as well. In this year’s member survey, 90% of you agreed that investor trust in the finance industry has been diminished in recent years. You have told us that you are tired of reading headlines about insider trading, hedge funds gone wrong, Ponzi schemes, and brokerage firms losing their clients’ deposits. You have described being sick of having to explain to clients that your firm is different from those making the headlines. You are worried that regulations designed to catch the bad guys will make it virtually impossible for you to focus on investing and working with clients. You have had enough of products designed with basically selfish motives.
My oldest daughter is in college in Manhattan. I scanned the pictures of Tuesday’s May Day protests and saw a lot of young people like her there. Personally, I’m not up for enduring another awkward summer of Occupy Wall Street. I’m sick of having our profession besmirched. I’m angry that the public can’t see the good work that thousands of professionals do every day.
So, now that we’re all hot and bothered, let’s chill out for a moment and analyze this. What is the root cause of these problems? Well, it’s a failure of self-control. As Walt Kelly’s cartoon character Pogo says, “We have met the enemy, and it is us.” When an industry loses credibility with the public, its professionals go down with the ship. It follows, then, that the duty to lead the investment business out of this crisis falls first on us. It rests on the shoulders of those with the highest levels of expertise, professional and ethical standards. Ladies and gentlemen, the stakes could not be higher.
This means we have to act. The time has come for every one of us to step up, and take personal responsibility for restoring trust. This starts in our places of work, and it extends from there out into the community.
Today I am sending you a personal call to action. Here are three things we each need to do to help restore trust.
First, let’s step forward with a bolder voice for professional ethics. Members of CFA Institute have always had to conform to a robust code of ethics, but these times call for us to step up more visibly. Please, get involved by promoting ethics training for your firm. Push to have your firm adopt CFA Institute’s Asset Manager Code of Professional Conduct. Point out and block the sale or use of products or practices that aren’t in the interests of clients.
Second, let’s focus on financial activities that enable economic and social progress, rather than on finance as an end unto itself. Your business exists thanks to a social contract granted in exchange for an expectation of professional services. In today’s atmosphere of mistrust, we must reconnect our profession with the public interest. Our firms will thrive if we offer services that truly help clients. If our companies engage in money games and place owners’ interests before clients, they will not fare well.
Number three: let’s extend our knowledge, our skills and our behaviors to wider communities within the field of finance. Leadership means sharing, teaching, and engaging. That means we mentor and inspire colleagues. It means we share and engage with peers, regulators, clients, and our service providers.
CFA Institute is your partner in this campaign and we care passionately about this. I want you to know that you can rely on CFA Institute for resources, knowledge and support, as you respond to this call to action. This past week, our Board of Governors approved our 3 year strategic plan, which calls us to make progress in three major areas: a bolder voice for ethics, a broader mission to reflect our role in the world, and the vision of a bigger community where we provide educational resources for those in this industry.
Last month we asked our members the question: “What are you doing to rebuild trust in the investment industry?” You sent back more than 1,500 responses, which is phenomenal. Based on your ideas, we have developed a collection of 50 things we can all do to help restore trust in the industry. We’re calling this The Integrity List.
Ladies and Gentlemen, time is of the essence. This morning, CFA Institute is emailing you links to three tools: the “Integrity List,” which I just noted, our Asset Manager Code of Professional Conduct, and our Research Foundation’s recent guide to Trustee Responsibilities. I invite you to print them out, share them, advocate for them at your firm, use them as part of your professional practice. For example, I challenge you to pick one behavior from the Integrity List that’s new to your firm and try to implement it over the next few quarters.
Another symbol of our rededication is the image we present to the world. After much work, CFA Institute is refreshing its brand. This is significant because our brand is recognized around the world. I’m proud to share with you today the symbol of our new brand – an updated logo and visual image for CFA Institute. Our new branding is more than our visual identity. It represents a shift in how we will tell our organizational story, with an emphasis on being insightful, vibrant, and approachable. You can think of this logo as symbolizing our diverse global community of professionals centered around ethical practice and a core set of values and beliefs.
So, the future of the profession rests on you and me taking personal responsibility to restore trust. Your bolder voice and your actions will inspire your colleagues to higher standards. Your inspired colleagues and your firm can help lead the industry. An industry that earns society’s trust can make the world a better place. Is it naïve to think that personal responsibility can change the world? To answer, I leave you with a quote from Mahatma Gandhi: “If you want to change the world, you must begin with yourself. You must first become the change that you want to see in the world”.
Ladies and gentlemen, thank you very much. Enjoy the day.