Ethics - more effort needed to improve legacy issues

Nick Pollard of CFA Institute

Jun 5, 2019

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1. Why are we still having a conversation about ethics today?

2. How would you like to see this improve?

3. Is this not exclusively the regulators responsibility?

4. Why did you decide this was an important topic for the CFA?

Video transcript

1. Why are we still having a conversation about ethics today?

I think we are collectively as an industry, very slow to understand that we have a responsibility to our customers, and our customers demand us to be more ethical. We're so bogged down with old practices, whether they're practices of compensation, or just of the way any kind of organisation runs, that we've still got the dynamic the wrong way around. At the CFA Institute we talk about customers should come first, the organisation second, and the individual advisor third. But in most parts of the world that still operates the wrong way around.

2. How would you like to see this improve?

What I have been pleased about is that the organisations we work with are taking this far more seriously. Not just in terms of wanting to be associated with us, because of what we stand for, but actually real rigorous training and development around understanding what ethics can mean for them in their organisation. Also what impact they want their organisation to have on their customer base and the general environment within which they work. We do training programs, training interventions with many companies across Asia-Pacific, and in fact the rest of the world. We've set up a specific ethics team who now work with institutions worldwide, helping them understand where they currently stand, and also what they need to do to improve on that. There is momentum behind this, but frankly there's still a long way to go. We see on a daily basis there are still examples of poor behaviour, either on an individual basis, or even on an industry basis. If the most important aspect of a client relationship is about building trust, you won't build that trust unless you have an ethical way of working with your customers.

3. Is this not exclusively the regulators responsibility?

No, it's not the regulator's responsibility. There's no regulator in the world that's big enough to have this kind of impact on the entire industry. So I think it has to come from within the industry itself.

4. Why did you decide this was an important topic for the CFA?

From our perspective, part of our mission is about creating a more transparent, fairer world for the investment management industry to grow in, and to have a more beneficial impact on society. From our perspective within that, ethics is one of the key aspects of making that happen.

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