Professionalism: Purpose, principles and practice

If a planes battery catches fire, you ground a whole fleet because people might die. But in finance, you do the opposite. You hide all of the information because you want to protect the institution. That doesnt help society and we need to do something different.

So said Kweku Adoboli, the convicted rogue trader, at a CFA Society UK event last year. At CFA Society UK we agree and believe that our profession has a lot to learn from other sectors.

Investment management is a professional activity. Because of the asymmetry of information between investment professionals and most of our clients, we owe those clients a duty of care. There are many other sectors where the same sort of professional duty is required. We trust the medical profession and expect those working in it to be competent and to act ethically because they hold our lives in their hands. We trust the aviation industry to keep us safe because we know what can happen if they fail to do so.

Professionalism has a purpose. Its purpose is immediately and obviously clear in medicine and in aviation, but is equally important – if perhaps a little less urgent – in areas such as law, accounting and investment management. In each of these fields, we expect people to achieve high educational levels and hold themselves to ethical and professional standards that are beyond legal requirements, enforceable and designed to benefit the public.

The recent CFA Institute global survey on investor trust illustrates the challenge the investment sector faces, revealing a significant gap between what more than 3,000 retail investors expect from their financial advisers and how satisfied they are with the relationship. The survey identifies competence, transparency and value generation – the hallmarks of professionalism – as the solution, advisers leading advisers to earn the trust of their clients.

The investor trust report, the third of its kind, demonstrates the importance of transparency and clarity to all investors – especially around costs and particularly in the UK. Globally, while 58% of all retail investor respondents said that full disclosure of fees and other costs was very important to them in building trust, 66% of UK respondents rated it as very important. In addition, 44% of UK respondents said that it is very important that their adviser charges fees commensurate with the value of the relationship, whereas 39% of global respondents felt the same.

The bad news is that there is still a large gap between the number of UK respondents that regard fee disclosure as very important (66%) and the number that say that their adviser delivers very well on this today (15%). The gap is similar in relation to the importance of fees being commensurate with value (44%) and delivery on this point (8%). We need to get better at giving people what they want, in a way that they can clearly understand and at a cost that they regard as fair.

The role of professionalism in the investment management sector was also recognised loud and clear by the Financial Conduct Authority. Last week, in its report on the outcome of its own Asset Management Market Study, the FCA upped the ante in terms of its expectations around professionalism.

At our upcoming annual Professionalism Conference, we will talk about the FCA report and what it means for our sector, and we will hear from those that can teach us how other sectors earn their clients trust.

Join CFA Society UK at the sixth annual Professionalism Conference: The investment professional of the future on 26 April to explore how professionals in other sectors are adapting to changing needs, and how technology will change the definition of a professional.

Book* your free ticket to hear expert views from Jeremy White, WIRED; Ben Page, Ipsos MORI; Gary Baker, CFA, CFA Institute, and Dame Helena Morrissey, Legal & General Investment Management. Book your place now.

*CFA Society UK membership number not required

Will Goodhart is Chief Executive, CFA Society of the UK, an organisation that represents the interests of more than 12,000 members of the UK investment profession.

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