THE FUTURE OF FINANCE

TOWARD A SUSTAINABLE FINANCIAL ECOSYSTEM

 FIVE ORGANIZATIONAL PILLARS
OF CFA INSTITUTE

Ethical Championing ethical behaviour in

Champion investment markets.

Global Creating a strong community of

Community investment professionals.

Industry Being a respected source of knowledge in

Knowledge investment markets.

Professional Raising standards of professional

Excellence excellence in the investment industry.

The Greater Build an investment industry that serves

Good the interests of investors and society.

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THE SOCIAL

CONTRACT

BETWEEN

FINANCE

PROFESSIONALS

AND THOSE WE

SERVE HAS

BEEN BROKEN

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THE FINANCIAL ECOSYSTEM HAS GONE
AWRY

Global
Economy

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 WE MUST RESTORE TRUST IN FINANCE

According to the Edelman Trust Barometer, the financial services industry is the least
trusted industry globally.

2013 2014
Technology 73 Technology 79

Automotive 66 Automotive 70

Food & Beverage 62 Food & Beverage 66

Consumer Packaged Goods 60 Consumer Packaged Goods 65

Energy 57 Energy 59

Pharmaceuticals 57 Pharmaceuticals 59

Media 50 Media 51

Banks 49 Banks 51
LAST!
Financial Services 46 Financial Services 48
From Stewardship by John Taft. This material is reproduced with permission of John Wiley & Sons, Inc.

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WHICH OF THE FOLLOWING FIRM LEVEL ACTIONS IS MOST
NEEDED IN THE COMING YEAR TO HELP IMPROVE INVESTOR
TRUST AND CONFIDENCE?
Global AMER APAC EMEA

40% 40% 40%

39%

28%
26%
25% 25%

14% 14%
13% 13% 13%
12% 12%

9%
8%
7%
6%
5%
3%
2% 2%
1%

Improved culture Increased adherence Improved Clarification of Increased staff training Other
established and to ethical codes and compensation fiduciary duty and education
encouraged by top standards practices responsibilities
management and
executives
No opinion option excluded from results.
Source: Global Market Sentiment Survey 2014

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 THE COSTS OF FAILURE OF TRUST

Investors who do not trust the industry are unlikely to:

Save and invest for their future
Achieve their long-term financial objectives

A savings gaps means:

Longer working lives
Lower quality of life
Intergenerational stress

Social impact

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WE MUST RESTORE BALANCE TO THE
FINANCIAL ECOSYSTEM

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CFA INSTITUTE FUTURE OF FINANCE PROJECT

Mission/Vision: To shape a trustworthy, forward-

thinking financial industry that better serves society

Objective: Provide the tools to motivate and

empower each actor in the financial ecosystem to
commit to fairness and integrity

Motivating Formula: Fairness + Integrity = Trust

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CFA INSTITUTE AND EDELMAN 2013 INVESTOR
TRUST STUDY
CFA Institute and Edelman partnered to understand the state of trust in the
investment industry. The study conducted in July 2013 surveyed 1,604 retail and
500 institutional investors in the United States, United Kingdom, Hong Kong,
Canada and Australia.

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FUTURE OF FINANCE TOPIC AREAS

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FUTURE OF FINANCE TOPIC AREAS

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 FUTURE OF FINANCE TOPIC AREAS

Our Goal:
To foster a trustworthy environment in
which financial agents serve their
clients in an ethical and professional
manner.

Key Solutions:
Statement of Investor Rights
Asset Manager Code of Conduct

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STATEMENT OF INVESTOR RIGHTS
Demanding that financial professionals abide by these rights helps you build trust in the person
and/or firm you engage with, and thereby collectively restore trust, respect, and integrity in finance.

WHEN ENGAGING THE SERVICES OF FINANCIAL PROFESSIONALS AND ORGANIZATIONS, I HAVE

THE RIGHT TO
1. Honest, competent, and ethical conduct that 7. Clear, accurate, complete and timely
complies with applicable law; communications that use plain language and are
presented in a format that conveys the information
2. Independent and objective advice and assistance effectively;
based on informed analysis, prudent judgment, and
diligent effort; 8. An explanation of all fees and costs charged to me,
and information showing these expenses to be fair
3. My financial interests taking precedence over and reasonable;
those of the professional and the organization;
9. Confidentiality of my information;
4. Fair treatment with respect to other clients;
10. Appropriate and complete records to support the
5. Disclosure of any existing or potential conflicts of work done on my behalf.
interest in providing products or services to me;
6. Understanding of my circumstances, so that any
advice provided is suitable and based on my financial
objectives and constraints;

Also available in:

Arabic Japanese
Chinese Korean
French Portuguese
German Spanish
Italian Thai

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FUTURE OF FINANCE TOPIC AREAS

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 FUTURE OF FINANCE TOPIC AREAS

Our Goal:
To support financial education by
providing resources that will help
Investment professionals make decisions
that better serve their clients.

Key Solution:
CFA Institute Education Products
Financial Market History Project
Claritas
Investment Certificate

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FUTURE OF FINANCE TOPIC AREAS

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 FUTURE OF FINANCE TOPIC AREAS

Our Goal:
To encourage sound retirement planning
based on understanding of key issues.

Example:
Pension Trustee Code of Conduct
Life Annuities: An Optimal Product for
Retirement Income
Online discussion forum on pension
design

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FUTURE OF FINANCE TOPIC AREAS

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 FUTURE OF FINANCE TOPIC AREAS

Our Goal:
To promote markets that ensure that all
investors have access to accurate,
complete, relevant, and timely information
so that they can make sound decisions.

Key Solution:
Principles for Investment Reporting

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FUTURE OF FINANCE TOPIC AREAS

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 FUTURE OF FINANCE TOPIC AREAS

Our Goal:
To advocate globally for workable
regulatory and market solutions that
promote fair and efficient capital markets.

Recent examples:
Self Regulation in the Securities
Markets
Report on Dark Pools

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FUTURE OF FINANCE TOPIC AREAS

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 FUTURE OF FINANCE TOPIC AREAS

Our Goal:
To create a better understanding
of and develop resolutions for
existing and potential risks that
could adversely impact the global
financial system.

Key Initiatives:
Seek influential partnerships and
support activities to promote a
sound financial system, e.g., the
Systemic Risk Council

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 HOW CAN YOU MAKE A DIFFERENCE?
Focus Areas Ecosystem Actors

Providers of Capital

Users of Capital

Intermediaries

Traders of Capital
Impact
Regulators
ACTION
on
Analysts Future of
Investment Managers Finance
Universities

Media

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 HOW CAN YOU HELP REBUILD TRUST IN THE
FINANCIAL ECOSYSTEM?

The CFA Institute Integrity List is a collection of 50 tangible steps that

investment professionals can take to restore trust in the investment industry.
The list was inspired by real-world ideas from CFA charterholders and
members.

Require training on ethical decision-making for yourself and your firm.

Place the clients interests before your own.
Name and shame unethical behaviour.
Recommend products with transparent payoffs, costs, and risks.
Help clients focus on risk as much as they do on performance.

For complete CFA Institute Integrity List online, visit:

www.cfa.is/50WaysRestoreTrust

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VISIT THE FUTURE OF FINANCE WEBSITE
CFAInstitute.org/FutureFinance
Centerpiece of a global, integrated
marketing campaign with tagline, It
Starts With You.
Focus on depth of content on Future
of Finance themes, with continual
updates
Repository for Project deliverables
Designed to drive engagement and
sharing
Includes a newsfeed organized by
topic area:
o Putting Investors First
o Financial Knowledge
o Transparency & Fairness
o Retirement Security
o Regulation & Enforcement
o Safeguarding the System

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THE FUTURE OF FINANCE ADVISORY COUNCIL
Chair Andrew Lo, Charles E.
John Kay, Economist and and Susan T. Harris
Author Professor of Finance at the
MIT Sloan School of
Management and Director
of MIT's Laboratory for
Financial Engineering
Keith Ambachtsheer, Ira M. Millstein, Senior
Director, Rotman Partner, Weil, Gotshal &
International Centre for Manges LLP, and Co-Chair
Pension Management, of the Millstein Center for
Rotman School of Global Markets and
Management, University Corporate Ownership,
of Toronto Columbia Law School
Paul Chow, Former Chief Ng Kok Song, Adviser
Executive, Hong Kong and Chair of Global
Exchanges and Clearing Investments at the
Limited Government of
Singapore Investment
Corporation (GIC)
Elizabeth Corley, CEO, Barbara Novick, Vice
Allianz Global Investors Chairman, BlackRock
Saker Nusseibeh, CEO
Tom Keene, CFA,
and Head of Investment,
Editor-at-Large,
Hermes Fund Managers
Bloomberg News
Robert C. Pozen,
Senior Lecturer, Harvard
Business School and
Senior Fellow,
Brookings Institution
Mary Schapiro,
Managing Director at
Promontory and Former
Chairman of the U.S.
Securities and
Exchange Commission
(SEC)
Andrew Sheng,
President, Fung Global
Institute
Robert Shiller, Sterling
Professor of Economics
at Yale University and
2013 Nobel Laureate in
Economics
John Taft, CEO at RBC
Wealth Management
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 THE FUTURE OF FINANCE
STARTS WITH YOU!

WWW.CFAINSTITUTE.ORG/FUTUREFINANCE

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