Investor First Week kicks off in Australia and New Zealand to encourage investors to take action on integrity
Investors being asked to assert CFA’s Statement of Investor Rights
Anthony Serhan
CFA Societies in Australia and New Zealand have kicked off Investor First Week today to encourage investors to assert their rights and demand higher standards of ethical conduct from the financial services industry and finance professionals.
Sydney, Melbourne, Perth and Auckland will join more than 50 cities around the world, where CFA societies represent more than 35,000 investment professionals, to promote greater ethical standards across the global financial services industry and to raise investors’ awareness of their rights.
Investor First Week in Australia and New Zealand is part of CFA Institute’s global Future of Finance initiative, a long-term effort to create a stronger ethical culture in the financial services industry. The initiative aims to encourage financial service providers including banks, asset managers and financial advisers to commit to fairness, improved understanding and personal integrity in dealing with investors.
Anthony Serhan, Managing Director, Research Strategy, Asia-Pacific at Morningstar and Vice President of CFA Society of Sydney, said that during Investor First Week, CFA Societies in Australia and New Zealand will be focusing on several constructive initiatives to improve standards and safeguard investors’ rights, including CFA’s Statement of Investor Rights.
“The Statement of Investor Rights is a set of standards that embraces higher ethical standards, more honesty and greater transparency. We want investors to better understand the conduct they are entitled to expect from financial service and product providers. We will be asking all investors to use the CFA’s Statement of Investor Rights and to present this statement to their financial adviser, banker or broker in any financial dealings with them.
“Trust is the most important attribute investors value when hiring an advisor or investment manager and currently trust in the financial services sector is at an all-time low. There is still a very real need to rebuild the trust of investors in financial advisers, asset managers and other product providers.
“Investors are still not knowledgeable about their rights and entitlements. The statement provides investors with the confidence to ask the right questions and is a helpful way for them to better understand how they should be treated. Together, investors holding their financial services providers accountable for professional and ethical behaviour and an investor-first mind set from providers, will help to restore trust and confidence in finance,” Mr Serhan said.
This week, CFA Societies Australia is also focusing on raising awareness of effectively dealing with the issue of mis-selling by advisers
“We will be highlighting the rights of investors to be informed of any existing or potential conflicts of interest that their financial service providers may have.
“The changes introduced by the Future of Financial Advice (FOFA) are designed to bring improved transparency to the financial services industry. CFA Societies Australia endorses any action that improves access to high quality financial advice benefiting retail investors. We also encourage and endorse any reforms intended to improve the trust and confidence of Australian retail investors in the financial planning sector.
“In Australia, the industry has been making headway in reducing the level of mis-selling. This is through increased fee disclosures and the banning of commissions including volume-based incentives.
“However, the full impact of the changes introduced by FOFA will take many years to fully assess and it is important we monitor progress by paying particular regard to lessons from other jurisdications whilst also contributing our learning to this issue.
“CFA Societies Australia is pleased that ASIC is taking steps to improve the quality of advice offered to retail clients by enhancing the minimum training standards required under RG 146. In particular, we hope that ASIC includes education and training on ethics, as proposed in its Consultation Paper last year. This has not been part of the standards before and represents an important step forward, ” Mr Serhan said.
“CFA Societies Australia is an advocate for greater investor education and targeted advisor training to truly raise the quality and standard of advice,” he said.
The Statement of Investor Rights provides that:
When engaging the services of financial professionals and organizations, I have the right to…
- Honest, competent, and ethical conduct that complies with applicable law;
- Independent and objective advice and assistance based on informed analysis, prudent judgment, and diligent effort;
- My financial interests taking precedence over those of the professional and the organization;
- Fair treatment with respect to other clients;
- Disclosure of any existing or potential conflicts of interest in providing products or services to me;
- An understanding of my circumstances, so that any advice provided is suitable and based on my financial objectives and constraints;
- Clear, accurate, complete, and timely communications that use plain language and are presented in a format that conveys the information effectively;
- An explanation of all fees and costs charged to me, and information showing these expenses to be fair and reasonable;
- Confidentiality of my information;
- Appropriate and complete records to support the work done on my behalf.
Click here for a printable copy of the Statement of Investor Rights.
