THE BLOG
30/05/2014 09:35 BST | Updated 28/07/2014 06:59 BST

The Future of Finance is Looking Brighter

At the beginning of May, I had the opportunity to perform one of my favourite roles overseeing Education at CFA Institute - presiding over the finals of our annual Global Research Challenge. The challenge, which tests teams on their knowledge and expertise in the investment industry, brings together the regional champions from EMEA, APAC and the Americas, each of which have beaten at least a dozen qualified and committed competitors from their regions.

At the beginning of May, I had the opportunity to perform one of my favourite roles overseeing Education at CFA Institute - presiding over the finals of our annual Global Research Challenge. The challenge, which tests teams on their knowledge and expertise in the investment industry, brings together the regional champions from EMEA, APAC and the Americas, each of which have beaten at least a dozen qualified and committed competitors from their regions.

This year, the victorious team was from the University of the Philippines Diliman, the APAC regional champion, and their performance was inspiring. The competition as a whole, in fact, never fails to reassure me about the future of the investment industry: if young people who are this smart, this committed, and this passionate are still choosing our industry, we must be doing something right.

That doesn't mean, though, that we should rest in this comfort. Far from it.

The investment world that these accomplished students, and millions of others, are entering is incredibly complex. When I entered the industry in the mid-1990's, it was in the formative stages of globalization. Today, just twenty years later, the market has been through three major capital market collapses and two global recessions. There is hope that the resiliency of the financial system is being addressed and we are starting to see positive signs of growth - but the geo-political situation is much more delicate.

Even beyond that complexity, we - old hands and new joiners alike - face a challenge that is arguably far greater than anything the industry has had to overcome before: a historic crisis of trust. For the five years since the collapse of Lehman Brothers and the ensuing global financial crisis, finance ranks as the lowest trusted industry in the world - lower than oil companies, lower than energy companies, in some polls even lower than the tobacco industry. The parade of scandals, corruption and malfeasance we've read in the papers has significantly eroded our credibility in the public square and on Main Street, and we can't blame the public for reacting the way they have.

For an industry whose value proposition rests in advisory or agency services, trust is oxygen. The Governor of the Bank of England, Mark Carney, said it well recently in Davos when he stated: "Banks must recognize that only exemplary behavior can confer social license to global financial capitalism." In other words, without trust, the investment industry doesn't have a business model.

Given that our mission at CFA Institute is to shape a future of finance that puts client first, is devoted to fair and efficient markets and ensures the industry is serving its original purpose of promoting the greater social good, this lack of trust is gravely concerning. In the past several years, we at CFA Institute have been working to communicate the importance of raising ethical and educational standards to address this problem, not only to the global companies in the industry, but - more importantly - to the passionate, committed and ethical individuals who make up the vast majority of it.

At the Global Research Challenge finals in Singapore, facing a roomful and global livestream of those passionate young individuals who are by definition the Future of Finance, we at CFA Institute issued a call to action - to ask them, and millions of others around the globe, to play their parts in restoring trust to the investment industry and re-connecting finance to its societal purpose. Put simply, we believe that "the future of finance starts with you" - and I offer these three practical suggestions as a start.

1. Always place client interests above your own.

Your client's agenda should always be your agenda. They are why our business exists. As epitomized in the recent movie The Wolf of Wall Street, wealth addiction can spread like a virus, resulting in destructive profit-seeking and short term personal gains at the expense of the client. Whether your role has a legal fiduciary responsibility or not, everyone that has the privilege to work in the finance industry is in some form a steward of a client's dreams and retirement, and we all have a responsibility to create a fiduciary culture in our firms.

2. Act with integrity, 24 hours a day, 7 days a week.

The days of compartmentalizing our professional and personal lives are long over. Social media has permanently blurred the two domains. Do you know the first thing I do now when I receive a CV of a job candidate that I'm interested in? I search their Facebook, LinkedIn and Twitter accounts to gauge their character. Be careful with the company you keep, ensure your words are always constructive, and manage your activity and posts with maturity. If you want to be successful in this profession, be a professional in all facets of your life.

3. Name and shame unethical behavior.

We should all have a zero tolerance policy for breaches in ethics. Period. Be respectful and careful in how you report this but do not look the other way. There is no reward for fear. I'm not sure I can say this more clearly, but do not work for an organization that promotes, enables, or even passively allows for misappropriation of client's interests. The Chairman of the UK HR Association recently said that cultural change requires "hiring a different sort of person." Be that different sort of person.

Our industry is waiting for a new set of leaders; pioneers that will break from the recent past, redefine the rules of engagement, and chart a new course. The future of finance is in the hands of each of us.