The CFA Institute Annual Conference is an unrivaled opportunity to access high-quality, unbiased educational content that equips investment professionals with the latest thinking on critical industry issues. The 71st CFA Institute Annual Conference will be held in Hong Kong on 13–16 May 2018.
How can finance be a force for good?
That may sound like a loaded question, but the answer is relatively simple: Investment professionals across the globe need to take the long view and bend the arc of the future away from being self-focused and toward caring about others. And in so doing, we can create a force for good.
“There’s a spectrum that runs from focus on what I have to do — the numbers I’m crunching, the to-do list, whatever it may be — to actually being able to notice another person,” said Daniel Goleman, a psychologist and author of Emotional Intelligence and A Force for Good: The Dalai Lama’s Vision for Our World. “Not only that, not just tearing ourselves away from our screens and noticing a person, but tuning into that person, empathizing with them, seeing if they’re in need, and then seeing if we can help them if we’re inclined.”
Speaking at the opening of the 69th CFA Institute Annual Conference, Goleman added, “That’s the arc from self‑focused, getting our work done . . . to caring about other people. That’s the shift that I’m going to encourage. I think the opportunities to help are everywhere; it’s just that we don’t notice. I think the opportunities for finance to help are enormous, but not often followed.”
Goleman noted that trust — or the lack thereof — remains a challenge for the industry. According to the 2016 Edelman Trust Barometer, financial services ranked dead last vis-à-vis other business sectors, with a 51% trust rating. While there undoubtedly remains a deficit, the good news is that public faith in financial services increased 8% since the 2012 survey. Still, more needs to be done to restore trust levels.
“Trust is an essential,” Goleman said. “Trust is actually part of the commodity that finance needs in order to operate well.”
What the financial industry needs, he added, is “a strategic pivot to look at what we’re doing in finance for society, for the greater good.”
Goleman urged those who work with private clients to think about the following question: What can you do to make a difference in the lives of the people you advise?
One way to think about this is to ask yourself or your client three broad sets of questions:
- What am I good at? What are my outstanding abilities? Where’s my excellence?
- What do I love doing? What really engages me?
- What matters to me? What really fits my sense of purpose and meaning? Where do my ethics tell me to go?
“If you or your client can align these three things — your excellence, your engagement, and your ethics — then you have what’s called ‘good work,’” Goleman said. “Something you love doing, you feel good about, you take pride in, and that you’re good at. It’s the best place you can put your energy.”
Goleman offered a game plan for how finance can become an active agent for good and, in so doing, drive positive innovation.
Here are five takeaways he has gleaned from the Dalai Lama that we can all apply to our lives.
1. Emotional Hygiene
“That means getting your disruptive emotions under control,” Goleman explained. “It doesn’t mean subduing passions and so on.”
Why is this important?
“As fintech and robo-advisers take hold, I think in your profession the human element is going to be more and more important,” he said. “How you handle clients. How you handle the people you work with. That has to do with these soft skills, with emotional intelligence.”
So, what would this look like in practice?
Goleman told delegates to think about it in the following way: The first element has to do with self‑awareness, which he said means “not being tuned out of what’s happening inside you, but rather sensing how you’re feeling, knowing how it’s affecting your performance. That leads to self‑management, which of course includes ethics, which is critical both for your profession and for the optics of finance. The first element is emotional balance, which means keeping these disruptive emotions and your impulses in check.”
The second is something that Goleman said is critical to finance — the drive to achieve: “Striving to meet or exceed a standard of excellence. Looking continually for ways to do better. Setting challenging goals. Taking calculated risks. That’s what you do every day.”
Then there’s having a positive outlook — being optimistic. “Seeing the positive in people, in situations, and events even when things get tough — being adaptable, handling change really well. Then there’s another dimension. This has to do with how we relate to other people. That first set is all about ourselves, but then there’s empathy.”
Goleman said there are three kinds of empathy:
- Cognitive empathy: You understand how a person thinks about things.
- Emotional empathy: You tune into the other person. You can build rapport or chemistry.
- Empathic concern: That’s what Goleman calls “the Good Samaritan empathy,” or caring about people.
Empathy is the foundation of relationships, Goleman said. “You use that foundation for influence — that is, having a positive impact on others, persuading them. You use it also, particularly if you’re in a leadership position, to be a coach or a mentor, to help people develop their own strengths.”
2. Adopting a Moral Compass of Compassion
This is where empathic concern comes in. It’s about caring about other people. “We have an innate, genetic, built‑in preference for caring, for helping,” Goleman said. “The converging data for that are massive. It begins to wane, actually, when kids go to grammar school, when they start being put in a competitive environment, where it’s all about me and how well I do. But this is a thread that’s very important to understand because it’s a capacity we all have through life. The challenge, really, is to expand our circle of caring. We naturally come into life wired to love the people closest to us — our family, our spouse, our friends.”
Goleman noted that “the first beneficiary of a compassionate feeling is the person who feels it because it activates the dopamine system. This is the feel-good system in the brain.”
Goleman challenged the delegates: “Here’s a question for you: Can finance be part of a solution of this systemic problem? Can we invest for the greater good?”
He thinks the industry can and that companies should “build into their charter not just doing well financially, but doing good in some way for society, for the world.”
(The mission of CFA Institute is “to lead the investment profession globally by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society.”)
3. Help the Needy
This is a “no-brainer,” Goleman said, but added that the Dalai Lama says, “You really help the needy by helping themselves.”
Goleman cited the example of Mellody Hobson, president of Ariel Investments and a strong advocate for financial literacy. Hobson was the youngest of six kids raised by a single mother in challenging financial circumstances and, as a child, was desperate to understand money. Now she is an advocate for financial literacy instruction in schools and for exposing children to saving and investing at a very young age.
4. The Environment
Goleman recounted an anecdote from his grammar school days when the students had to do a drill called “duck and cover”: They would get under their desks and put one hand over their eyes and the other over their necks because this, they were told, would protect them from a thermonuclear bomb.
“That was a generational trauma,” he said. “It was the height of the Cold War. Every generation has its trauma. Today’s children and teenagers are experiencing a generational trauma, which is the drumbeat of headlines of trouble with the planet. That they will grow up in an increasingly difficult future. This is a very important fact for anyone interested in investment.”
Goleman said we are living in in the Anthropocene age. “Maybe you know the term. It means the first geological age in which the activity of one species — us — is eroding and degrading the eight global systems that support life on the planet,” Goleman explained. “It’s not just carbon. That’s the poster child. It’s water. It’s biodiversity. It’s phosphorus. It’s all the things the planet needs for life. We’re indifferent, and we’re indifferent because our brain has a design flaw.”
What he means by that is that our brain was designed to recognize threats in the Pleistocene Epoch. “Thousands and thousands of years ago, when the danger was the rustle in the bushes: might be a tiger. We’re hyper alert,” Goleman said. Today is different.
“The brain is designed for a different range of threat than we face today,” he added. “Our perceptual system is designed for the same purpose. The changes in the planet are imperceptible. They’re too micro. We don’t see them. We don’t feel them. We don’t sense them. Our radar for threat in the brain shrugs. It doesn’t care. We need a work-around. Data here are very, very important. We need a cognitive understanding of the systems at work here so we can come up with better solutions.”
Goleman told the delegates that the Dalai Lama “is really encouraging a systemic understanding of the economy, of the environment, of technology in order to come up with sophisticated answers in the future.”
As we look to the future, we will need to redesign many products because of what they are doing to the planet. Think about it: Many industrial platforms and processes that are part of our everyday lives were developed before we knew about the negative environmental consequences.
“If you’re looking for long-term financial investments, think about this,” he said. “Given what’s happening to the planet and given how millennials and younger people are feeling, it is going to be imperative to reinvent everything. This is an enormous entrepreneurial opportunity going into the future.”
5. A World without War
Goleman admitted this a very ambitious goal. “You look at the headlines, and it seems absolutely impossible, but [the Dalai Lama] thinks very long term,” Goleman said, adding that he “advocates and actually embodies a sense of the oneness of humanity, which is an antidote to the us-and-them thinking that leads to war.”
One approach is to encourage education that fosters “warmheartedness,” something called “social and emotional learning.” Goleman said these programs help “kids become more self-aware, manage themselves better, empathize, handle relationships well, make good decisions in their lives.”
It’s all about helping people become more self-aware. And it’s a long-term goal. It starts with educating children so they know how to handle disputes.
How does this all fit together to bring about lasting change for the investment profession? How will this shape the Future of Finance, the global effort by CFA Institute to shape a trustworthy, forward-thinking financial industry that better serves society?
Goleman offered inspiration from the Dalai Lama: “He says, ‘Each one of us, acting now, in whatever way we can, can in aggregate, create a force for good, bending the arc of the future to the benefit of the world.’ He says, ‘Don’t depend on governments, on policy. Don’t wait for that. Each of us has an arena where we can act.’ He also says, ‘Take the long view.’”
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
Photo courtesy of W. Scott Mitchell