The Future State of the Investment Profession

Stockholm (NordSIP) – The President and CEO of the CFA Institute Paul Smith, CFA recently visited the Nordics. Before meeting local CFA charterholders at an evening reception in Stockholm, the local affiliated CFA Society Sweden hosted a luncheon for some of the most prominent senior executives in Swedish investment industry to meet with Smith to discuss the future state of the investment profession.

Paul Smith, CFA heads the CFA Institute which has more than 146,000 members in 160 countries and territories. CFA Society Sweden is one of 147 local member societies affiliated with the CFA Institute which administers the global Chartered Financial Analyst (CFA) curriculum. The mission statement of the 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.”

Smith mentioned that the investment management industry is facing significant disruptive forces both internally and externally. He expects that shifting regulatory environments and new macroeconomic conditions, as well as the current trends for digitization and new tech-centric business models, will force changes in the industry. The study The Future State of the Investment Profession* looks at what these changes might entail and suggests ways to achieve the best possible outcome for the future state of the investment profession.

It was suggested that the investment management industry could improve on the low level of trust among the public and hasn’t fully achieved acceptance by society, which leads to more stringent regulation by authorities. On an organizational level, Smith argued, practitioners haven’t structured themselves to serve clients first to a satisfactory level. He observed that the investment management industry hadn’t convinced society that it adds value. This is when in his opinion the investment management profession should be a noble calling of trying to help people achieve their long-term financial goals. The investment industry needs to build credibility and demonstrate professionalism, which is achieved through gaining trust and delivering value.

Smith suggested that the answer is that the investment management industry must transform itself and migrate away from industry trade bodies to professional bodies, with rigorous exams to test technical competence, continuing education, and an enforced ethical code for members. It was suggested that it is a matter of existential importance that the investment profession makes a consistent and determined contribution to the wealth and wellbeing of society.

Amongst other things, the investment industry has failed to adequately communicate its noble calling mentioned above so to attract women into the industry. For instance, only 18% of global CFA charterholders are women. The CFAI is trying to address this diversity challenge by last year introducing a scholarship for women which pays for half of the cost of the CFA programme (see https://www.cfainstitute.org/programs/cfaprogram/scholarships/Pages/awareness_scholarships.aspx for details on how to apply).

The Study ends with a call to industry action: 1) Start with purpose (enlightened self-interest), 2) Build talent (values critical), 3) Plan disruption (foresee scenarios), 4) Produce the value (outcome vs. expectation), and 5) Make trust. The meeting ended with a thoughtful mood amongst the participants.