Margaret Franklin

CFA Institute, the global association of investment professionals, and CFA Society Australia, today launched the Australia edition of its voluntary Diversity, Equity, and Inclusion Code for the Investment Profession (DEI Code).

The voluntary DEI Code is available to investment organisations in Australia of any size that seek to accelerate change by fostering a commitment to DEI.

The Australia DEI Code follows the successful introduction of a DEI Code in the United States and Canada in February 2022, the UK edition in October 2023, and the DEI Code Europe was launched in the Netherlands in June 2024. Since the February 2022 launch, the DEI Code has been adopted by more than 200 investment organisations, representing nearly 30 per cent of global assets under management. CFA Institute worked with CFA Society Australia and a DEI Code (Australia) working group of local investment and DEI professionals from organisations including HESTA, VFMC, Future Fund, Future IM/Pact, and The University of Sydney, to adapt the Code for DEI challenges and opportunities specific to Australia.

“Qualitative and quantitative research has proven that diverse perspectives lead to better outcomes on behalf of investors and create better work environments for employees. To make concrete progress on DEI, organisations that seek to do so need to integrate principles of equity and inclusion throughout the business in terms of behaviours, policies, and operations,” said Margaret Franklin, CFA, President and CEO, CFA Institute. “I’m especially thankful for the collaborative support for the Australia edition of the DEI Code, and I am excited that industry leaders are seeing DEI as a business priority and the right thing to do to support their organisations’ purpose and values.”

Signatory firms voluntarily commit to six metrics-based principles with the goal of creating better working environments and a cycle of positive change for future generations. The six principles to which signatories voluntarily commit are:

• Pipeline: Expanding the diverse talent pipeline.
• Talent Acquisition: Designing, implementing, and maintaining inclusive and equitable hiring and onboarding practices.
• Promotion and Retention: Designing, implementing, and maintaining inclusive and equitable promotion and retention practices to reduce barriers to progress.
• Leadership: Using our position and voice to promote DEI and improve DEI outcomes in the investment industry. We will hold ourselves responsible for our firm’s progress.
• Influence: Using our role, position, and voice to promote and increase measurable DEI results in the investment industry.
• Measurement: Measuring and reporting on our progress in driving better DEI results within our firm. We will provide regular reporting on our firm’s DEI metrics to our senior management, our board, and CFA Institute.
  

Sarah Maynard, ASIP, Global Senior Head, Diversity, Equity, & Inclusion, CFA Institute, commented: “The DEI Code is designed to help organisations address complex behavioural issues encountered in creating inclusive workplaces in the investment industry. The working group was very intentional about adapting the Australia edition to resonate better with local sensibilities, and provide Australian employers with a supportive action-focused framework to build impactful and measurable DEI strategies. By committing to the DEI Code, signatories in Australia take an important leadership role in further driving and accelerating critical and lasting change.”

CFA Society Australia CEO Lisa Carroll commented: “With the launch of the Australia DEI Code, what is clear is that the market is taking actionable steps to tackle a challenge that is highly complex, while avoiding diversity-washing. Together with CFA Institute, we look forward to working with DEI Code signatories in Australia to build and develop more inclusive cultures across the investment sector. This will help close the gap between employers that want to act on DEI and those that actually do.”

Signatory organisations voluntarily commit to meet the following foundational reporting requirements within two years of becoming a DEI Code signatory:

• An established senior leader ownership and oversight governance process.
• Formal, written, publicly available communications outlining the organisation’s DEI strategy, policy, commitments, and high-level objectives.
• An implementation plan to integrate DEI within the signatory organisation’s people, processes, and policies.

Read the Diversity, Equity, and Inclusion Code for the Investment Profession (Australia)

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Notes:
[1]  DEI Code in the United States and Canada
[2] UK edition
[3] DEI Code Europe was launched in the Netherlands

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The Private Markets and Alternative Investments Certificate will be available to Australians and is suitable for new entrants to the industry who aspire to work for a General Partner (GP) firm or other alternatives specialist, existing investors or asset owners who seek to allocate investments to private markets or alternative investments, and consultants working with General Partner or Limited Partner firms who wish to understand the investment landscape and industry terminology for the benefit of their clients.

The Certificate is a five-course, self-paced online program with a foundational curriculum that is enhanced with additional practitioner insights and perspectives. It equips learners with essential knowledge on private equity, private credit, real estate, infrastructure, commodities, and hedge funds. 

The five courses are:

• Course 1: Introduction to Private Markets and Alternative Investments 
• Course 2: Private Equity and Private Credit Investments  
• Course 3: Real Estate and Infrastructure Investments 
• Course 4: Commodities and Natural Resources Investments 
• Course 5: Hedge Fund Investments 
  

Richard Fernand, Head of Certificate Management at CFA Institute said: “The investment landscape is constantly changing, and CFA Institute recognises the importance of adapting to the needs of a dynamic and diverse investment profession and client needs. The development of the Private Markets and Alternative Investments Certificate acknowledges both this increasingly important investment specialism and the demands of candidates as they pursue a career in the alternatives industry. This certificate, together with the release of the CFA Program LIII Private Markets Pathway, demonstrates CFA Institute’s commitment to developing high quality educational opportunities in the alternatives space.

“The Private Markets and Alternative Investments Certificate offers strong foundational learning and practical content providing candidates with increased confidence and enhanced credibility. We plan in the near future to release more advanced certificates that will provide learners with more advanced skills. The course aims to develop a learner’s ability to think critically, ask insightful questions, and innovate within the private markets and alternative investments space, introducing foundational concepts, tools, and techniques needed to open doors, further their careers, and benefit clients.”

Lisa Carroll, CEO of CFA Societies Australia,said Australian investment professionals will be able to undertake the online program with enrolments available, and would greatly benefit from the five courses given the rising importance of alternative assets in institutional investors’ portfolios.

“With the growing importance of alternative assets, particularly in the portfolios of Australian superannuation funds, this course will provide essential training for financial professionals who are working, or interested in working, in private markets and alternative investments. This certificate will allow them to gain a broader understanding of the broad range of alternative assets and their benefit for investors’ portfolios,” Carroll said.

All coursework can be completed online. For the full Private Markets and Alternative Investments Certificate details and course descriptions, visit the CFA Institute website.

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In May 2023, 52% of the 15,895 candidates worldwide who sat for the Level II CFA® Program exam passed, above the 10-year average of 45%,^[1] the CFA Institute said. That was the highest percentage since the 2020 test when pass rate dropped to as low as 29% during the pandemic in August 2021. The May result also represents an improvement on the 44% success rate^[2] for those who sat for the exam in November 2022.

Chris Wiese, CFA, Managing Director, Education at CFA Institute, congratulated the successful Level II candidates. “The Level II pass rate continues to normalise from the depths of the pandemic as candidates’ study schedules get back on track. The May Level II cohort returned a notable pass rate of 52%, which comes in above the 10-year average. Over time, we have seen that pass rate spikes do occur, and it’s nice to see more candidates making good progress through the CFA Program.”

Lisa Carroll, CEO of CFA Societies Australia, said: “Congratulations to all successful candidates in Australia. Locally, we have seen the pass rate improve too as financial professionals’ learning normalises. We saw a double-digit percentage increase in the number of candidates in Australia who sat for the Level II exam in May compared to the previous sitting last year. This is also the largest number of Level II candidates since pandemic-related lockdown measures were implemented across Australia in late 2021.

“We have been pleased to congratulate and welcome nearly 300 new charterholders in Australia in the past year as our membership continues to grow. We are very encouraged by these signs of green shoots, as more candidates realise their career aspirations and potential,” Carroll said.

“Importantly, being a CFA charterholder can help professionals move ahead of their peers with competency-based education in essential areas such as financial markets functioning, quantitative analysis, portfolio and risk management, financial statement analysis, derivatives and alternative investments. Ethics education too enables professionals to resolve ethical dilemmas in the best interest of their clients, which is crucial to maintaining trust in, and the robustness of, the financial services industry,” she said.

Candidates for the May Level II CFA Program exams attended in person at one of 471 proctored computer-based examination venues located in 361 cities in 102 markets worldwide. Exam Levels I and II were held during the May testing period.

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[1] https://www.cfainstitute.org/-/media/documents/support/programs/cfa/cfa-exam-results-since-1963.pdf
[2] https://www.bloomberg.com/news/articles/2023-01-19/cfa-level-ii-pass-rate-rises-to-44-closer-to-historic-average

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Lisa Carroll

The global Graduate Outlook Survey 2023 has been released by CFA Institute, the global association of investment professionals, reveals the most important factor Australian graduates seek in a job is a good salary, followed by a flexible working environment, training opportunities, then clear career progression possibilities.

More than three in five Australian graduates (63%) rated a good salary as what they look for most in a prospective employer, well ahead of flexible working environment, which was sought by 50% of graduates, followed by job and training opportunities (sought by 39%). Meanwhile, almost one in three Australian graduates (29%) view the prospect of low pay as their biggest concern regarding their career prospects, followed by feeling unqualified (27%). CFA Institute surveyed almost 10,000 current university students and recent graduates aged 18-25 from 13 markets on their career outlook.

Australian graduates are generally upbeat about finding a job.  Three quarters (75%) say they are confident in their future career prospects, up from 65% in 2021.  Compared to the 2021 Global Graduate Outlook Survey, industry confidence of Australian graduates improved most in finance (with 19% of those surveyed confident about their careers prospects, up from 13% in 2021), and IT & Telecoms (up to 17% from 9% in 2021) while confidence in education and medicine dropped.

“Despite the uncertainty created by the pandemic, students and recent graduates across the world feel more positive about their career prospects, with a big jump in confidence about finance careers. This generation of graduates also displays a strong interest in developing the skills needed for career advancement,” said Margaret Franklin, CFA, President and CEO, CFA Institute. 

Lisa Carroll, CEO of CFA Societies Australia, said: “Seventy-two percent of Australians surveyed said post-graduate certifications and qualifications will help them secure higher earnings while 70% believe they will give them an edge in the job market. Businesses that are investing in the learning and development of their staff and are partnering with certification and educational institutions are seen as responsive to graduates’ needs to further their knowledge and careers.”

The research uncovered that Australian graduates are most confident about a career in healthcare, followed by finance, sales, media and marketing, education then IT and technology. Australians are more upbeat about finding employment in healthcare than international graduates, who are most confident about finding employment in the finance sector.

The survey reveals a high level of confidence in the importance of higher education qualifications. Three-quarters of Australian graduates believe that pursuing a degree is worth it (76%) and that their career prospects are improved by undertaking a degree (73%). More than nine in 10 (93%) said upskilling or acquiring professional/post-graduate certifications are important to the job market,” said Carroll.

“Confidence in the potential of an educational degree and certifications shows that graduates have high expectations for career-ready and professional skills coming out of university,” Carroll said. “The research shows a desire for graduates to prolong their time in education, through certifications and trainings, with a clear acceptance that this is a powerful way to continue to grow professionally and advance their careers.”

When it comes to work arrangements, Australian graduates prefer a hybrid working environment or complete flexibility – just 15% of graduates want to work entirely in the office and just 15% want to be entirely remote, compared to 48% who prefer a hybrid arrangement. Australian graduates also consider themselves to have better career prospects than their parents’ generation, with 51% holding this belief, while 24% think they have the same career prospects.

Graduates convinced by importance of qualifications and determined to use career to “give back”

Together with a desire to upskill, Australian graduates possess a determination to make a positive societal and environmental contribution through their career. More than nine in 10 (92%) say it is important that their career allows them to make an impact. Just 8% think it is not very important.

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Margaret Franklin

CFA Institute, the global association of investment professionals, has launched the Handbook of Artificial Intelligence and Big Data Applications in Investments, (“AI Handbook”), published by the CFA Institute Research Foundation. The Handbook reveals how asset managers are using AI and big data technologies to augment the investment process in pursuit of enhanced investment and business outcomes.

Through contributions from data scientists and investment leaders at firms including AllianceBernstein, APG, Goldman Sachs, Man Group, Neuberger Berman, NVIDIA, Ping An, Robeco, and Virtu Financial, the CFA Institute Research Foundation AI Handbook offers an inside view of the investment industry’s adoption of data science to generate investment insights, build more resilient portfolios, make better trading decisions, streamline client service, develop client-centric products, and gather business intelligence.

Margaret Franklin, CFA, President and CEO, CFA Institute commented: “At CFA Institute we view the combination of artificial intelligence and human intelligence as the winning formula for successful financial institutions in the future. As AI and big data applications become increasingly integrated into the investment process, industry professionals need to be well equipped to evaluate and incorporate these practices effectively. We hope the AI Handbook can support the industry in adopting artificial intelligence and big data practices in a meaningful way for the ultimate benefit of clients. We extend our deep thanks to our collaborators whose time and resources afforded to this important work ensure the practical nature of the AI Handbook.”

Larry Cao, CFA, Senior Director of Research, CFA Institute said: “The industry’s needs have grown from asking for proof that AI and big data work, to asking for an action plan that can provide support to firms’ strategy as machine learning methodologies rapidly become mainstream. The AI Handbook is the latest in a series of CFA Institute research aimed at equipping practitioners and policymakers with the tools to evaluate and incorporate AI and big data techniques with the highest standards.”

AI Handbook contents

The AI Handbook is written from the industry perspective and based on real-world, battle-tested solutions. Release I of the AI Handbook, published this week, provides “guided tours” of the current state of machine learning and data-science applications in investments through detailed insights from authors at Robeco, Goldman Sachs, and Neuberger Berman. Contributors from Applied AI, AllianceBernstein, Off-Script Systems, and Two Centuries Investments discuss advances in natural language processing and generation in the investment context including ESG analysis.

Release II of the AI Handbook, to be published in April, will offer leading-edge studies in trading with machine learning and big data from Virtu Financial and Man Group. Deep insights into chatbot, knowledge graphs, and AI infrastructure from the investment perspective, including intelligent customer service, accelerated AI and use cases in investment management, will be offered by Ping An and NVIDIA. A case study of Symbolic AI is offered by APG Asset Management.

Larry Cao, CFA, added:  “There is no single best operating model for data science integration that fits all asset management firms. Technologies must be customised to fit organizational culture, structure, core value proposition, strategic prioritization, and budgeting methods. The handbook offers a companion to support firms to start, refine, or plan the next phase of their data science journey.”

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The report, Cryptoassets: Beyond the Hype: An Investment Management Perspective on the Development of Digital Finance, summarises the findings from CFA Institute interviews with investment professionals and crypto experts.  Given the inherently cross-border and decentralised nature of blockchain processes and cryptoassets, regulators must find ways to harmonise regulatory frameworks at an international level, the report finds.

Already, some regulators are acting. The Bank of International Settlements last month outlined policy approaches to ban, contain and regulate cryptoassets,^[1] while the US House Republicans has set up a committee to oversee the cryptoasset industry.^[2]

Olivier Fines, CFA, Head, EMEA Advocacy, CFA Institute, says a strong regulatory framework needs to be established to benefit crypto providers and users. Crypto platforms combine many of the functions that in mainstream finance are kept separate, such as the roles of brokerages, exchanges, market makers, custodians and clearing agencies. As a result, regulation is needed to ensure the safety of investors’ assets.

“The debacle at FTX shows the harm that can come to investors and platform participants when client assets are not kept safe. The example of FTX further underlines the importance of custody issues and the responsibility of investors to base their decisions on the investment case and not on hype and speculation,” Fines said.

“Policymakers must either agree on the application of existing laws to various components in the crypto ecosystem or craft new laws to fill in any gaps. Trust in the integrity of crypto markets is essential to attract investors and build crypto networks to scale,” he said.

“Existing regulations that intend to prevent traditional finance firms from using customers’ assets to fund their own or affiliated businesses may not always provide similar protections for investors in terms of cryptoassets or the regulation of crypt platforms.”

The report offers several recommendations for fiduciaries, investors, and policymakers.  These include:

• To the extent possible, policymakers should harmonise regulatory frameworks at an international level. Agree on definitions and supervisory programs that take account of the specific nature of cryptoasset services.
• Determine if cryptoassets are securities, other forms of financial instruments, commodities, or currencies and harmonise this definition at the international level. CFA Institute believes that several cryptoassets would meet the definition of securities under US Securities laws, for example, while in the European Union, this debate is taking place in the context of MiFID II. CFA Institute would argue against designing new extensive regulation as a simplistic response to the difficulty of qualifying cryptoassets.
• Regulation on cryptoassets and digital finance should remain technology neutral. Regulators should not adjudicate which technological developments or orientations offer markets, investors, and consumers the most benefit. Nor should policymakers compromise investor and consumer protections because a technology is new.
• Regulate Stablecoins for systemic risk potential. Stablecoins, one subset of cryptoassets, should be properly regulated from a prudential, business conduct, and investor protection standpoint. The method employed to maintain the peg should be scrutinised and their collateral verified independently. These instruments create ties and ramifications with traditional financial markets in ways that may represent systemic risk to financial stability if left improperly supervised.
• Monitor the cryptoasset market to ensure it remains driven by sound competition forces and avoids undue consolidation. Monitoring programs should be established with a specific focus on costs, fees, and business practices. The potential for consolidation should not result in a new value chain working in the interests of a selection of technologically advanced companies.
• Monitor and control market abuse risks. Regulators should harness advanced forms of data science to monitor such activity to maintain market integrity. The fragmented nature of the cryptoasset market will require regulators to establish information sharing mechanisms to ensure a coherent and comprehensive understanding of transactions in this market.
• Monitor and measure financial risk build-up in the DeFi sector. Depending on the pace of the development of decentralised finance (DeFi) services, regulators should develop metrics to measure and quantify the build-up of risk. It is possible that lending and borrowing in the DeFi sector will require similar prudential measures to those related to financial institutions for their securities lending business dealings.
• Custody of cryptoassets needs to be regulated and secure. Policymakers should place a high priority on enacting a framework of laws and regulations to ensure the safe custody of customers’ cryptoassets. Crypto platforms should not be allowed to use customer assets to fund their own businesses. Customer assets should be segregated and protected even if the platform or firm becomes bankrupt.

Recommendations for fiduciaries and institutional investors:

• Hype is not a sound basis for an investment case. Proper analysis of value, merits, and risks remains necessary for fiduciaries to comply with their duties of prudence, loyalty, and care.
• Basic principles of portfolio construction continue to apply. In line with CFA Program® teachings, it is recommended that investors continue to take a holistic and strategic portfolio construction view on their investments by balancing short-, medium-, and long-term objectives.
• Careful analysis of value and portfolio benefits is necessary. It is recommended that fiduciaries provide grounded analysis of intrinsic value, volatility, correlation effects, momentum, or technical features of their proposed investment within the overall portfolio context, whether directly into tokens or indirectly through the equity of an enterprise, before claiming that such an investment satisfies their usual standard of care.
• Intrinsic value should be related to an in-depth understanding of use cases. It is recommended that fiduciaries interested in the fundamental value of cryptoassets conduct an in-depth and rational analysis of the use cases for the tokens, project, or enterprise.
• Careful analysis of the sustainability of the business model and client acquisition strategy is necessary. It is recommended that fiduciaries pay particular attention to the potentially circular nature of the cryptoasset project being analysed, focusing on the project’s intrinsic and distinguishing qualities, along with its client acquisition model.
• Fiduciaries need to ascertain the custody chain and safekeeping of client assets. Fiduciaries should require the same standard of quality or care as they apply to all other assets, or to contract with a third party that can provide this quality standard.

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Notes:
[1] https://www.theblock.co/post/201636/bank-of-international-settlements-outlines-policy-approaches-to-ban-contain-or-regulate-crypto
[2] https://www.cnbc.com/2023/01/13/house-republicans-move-to-regulate-crypto-with-new-subcommittee.html

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Lisa Carroll

A new survey reveals that almost one in two Australian retail investors (45%) trust the financial services industry, though Australian investors are overall less trusting of the financial services industry and financial advisers than their global peers.

The data is based on a global survey by the CFA Institute of retail and institutional investors that measured their level of trust in the investment industry. The report, Enhancing Investors’ Trust – the 2022 CFA Institute Investor Trust Study^[1], also reveals that globally, trust in financial services has reached an all-time high. The proportion of institutional investors globally with high or very high trust in financial services has risen to 86%, up from 65% in 2020. Among retail investors, trust levels jumped to 60% from 46% in 2020. Trust levels jumped the most in the US, Singapore and Australia.

The report identifies five factors which have driven trust higher: the strong share market performance; fee compression on investment products; the greater level of technology-enabled transparency on investment products; greater investor access to investment markets; and new personalised investment products such as those with a focus on environmental, social, and governance (ESG) factors.

“The highs we’re now seeing in investor trust are a cause for optimism, helped on by strong share markets and falling fees, but the challenge is sustaining trust moving ahead given greater levels of share market volatility.

“In Australia too, trust has jumped significantly since 2020 when just one in four investors trusted the financial services industry, with the Hayne Royal Commission eroding confidence in the asset management industry given the significant amount of negative news coverage at the time,” said Lisa Carroll, CEO of CFA Societies Australia.

“Looking ahead, as interest rates rise this year and returns fall on asset classes such as equities and property compared to previous years, investment product providers and financial advisors may be more challenged maintaining trust levels with their clients. Technology, the alignment of values, and personal connections with investors can, however, help,” Carroll said.

The survey reveals Australian retail investors with a financial advisor are more trusting of the financial services industry; more than one in two people with an adviser (58%) trust the financial services industry, compared to less than half of those (39%) without an adviser. That compares to more than two-thirds of investors globally with an adviser (69%) who trust the financial services industry.

Retail investors also believe that having a financial adviser adds value. Among those with a financial adviser, 85% agreed that there is fair opportunity to profit by investing in capital markets (an increase from 81% in 2020), compared to 72% of those without an adviser (an increase from 57% in 2020). Of Australian retail investors, 86% agreed that there is a fair opportunity to profit.

However, retail investors in Australia are less trusting of financial advisers than their global peers. While 42% said they trust financial advisers, that jumps to 56% of all retail investors globally.

Most investors followed the advice of their adviser during the March 2020 downturn. Among those who were advised to significantly or slightly reduce risk/exposure to the market, 88% and 77% reduced risk, respectively. Among those who were advised to significantly or slightly increase risk/exposure to the market, 75% and 64% did increase risk as advised. However, 21% and 24% reduced risk, respectively. “Overall, having a trusted adviser to inform client decisions in stressed market conditions helped investors stick to their long-term investment plans,” Carroll said.

The main reasons that Australian retail investors leave an adviser are underperformance (51%), followed by a lack of responsiveness (37%), inadequate data security (35%) and fees that are too high (35%).

Trust level in the financial industry among retail investors:

Younger investors, particularly millennials, are leading the way in their use of technology. This investor cohort has relatively high trust in robo-advice, digital apps, and desire to invest in new investment opportunities. More than 70% of millennials prefer technology platforms and tools over having a human being to help navigate their investment strategy, compared with just 30% of those aged 65 or older, the survey found.

Advice is still the domain of humans, with 81% of Australian retail investors more likely to trust human advice versus robo-led advice. China is the only market where fewer than half of retail investors (34%) prefer a human adviser. 

Other key findings from the survey

• The survey reveals that most retail investors with financial advisers (58%) consider themselves early adopters when it comes to new investment products compared to around a third of retail investors (37%) without an adviser.
• In terms of generational differences, the under-35s are nearly twice as likely as the over 65s to have a retail trading account (68% versus 37%, respectively), and are nearly three times more likely to trust digital nudges or technologies (92% versus 33% respectively). Overall, 71% of retail investors say that retail trading apps have increased their understanding of investing, and most say these apps have increased their frequency of trading (57%).
• Most institutional investors (87%, up from 66%) and most retail investors (50%, up from 48%) say technology increases their trust in their asset manager or adviser – due to more transparency, simplified access to markets and products, and personalisation.
• Most institutional investors (87%, up from 66% in 2020) and most retail investors (50%, up from 48%) say technology increases their trust in their asset manager or adviser – due to more transparency, simplified access to markets and products, and personalisation.
• Retail investors across all markets are either interested in or already using ESG investing strategies (77%). Climate change, clean energy, air and water pollution are the top concerns for retail investors, while data protection, sustainable supply chain management, and climate change are the top concerns for institutions.
• Among institutional investors, best-in-class screening (cited by 57%) has overtaken engagement and active ownership as the most popular approach to ESG investing, and institutional investors show high levels of trust in ESG messaging and net-zero pledges (87% trust such messaging). In contrast, less than half (46%) of retail investors trust these pledges, illustrating some concerns over potential greenwashing.
• Fewer than a quarter of retail investors in Australia and Canada (23% and 18%, respectively) say it is important to have an adviser who shares their values. This sentiment is highest in China, where 74% believe shared values are important.

Methodology

On behalf of CFA Institute, Coalition Greenwich conducted an online survey of 3,588 retail investors and 976 institutional investors in October and November 2021. Markets included were Australia, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Japan, Mexico, Singapore, South Africa, United Arab Emirates, UK and the US. Retail investors surveyed were 25 years or older, with investible assets of at least US$100,000, except in India. Institutional investors included those with responsibility for investment decisions at organisations with assets under management of at least US$50 million, including public and private pension funds, endowments and foundations, insurance companies, and sovereign wealth funds.

Read the full survey. 

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References:
[1] https://trust.cfainstitute.org/

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Lisa Carroll

A new report from the CFA Institute, The Future of Work in Investment Management: Changing Organisational Cultures, has found that the culture of investment organisations often constrains innovation; for stronger cultures to develop, leaders must promote more adaptive, agile and inclusive organisations.

Although most investment leaders recognise culture as extremely important, the culture of investment management organisations has, to date, been one of the least understood and least managed areas in the industry, the report found. More proactive leadership of culture is therefore needed.

Lisa Carroll, CEO of CFA Societies Australia, said while a cultural reset will be difficult for some organisations, it is important that employers focus on employees’ performance, promote inclusive work practices and adopt a strong focus on values including trustworthiness.

“Culture is shaped by top-down organisational messages and bottom-up team experiences. The investment industry has an opportunity to build more effective teams through the power of inclusion that values the benefits of diversity,” Carroll said.

“Culture has moved forward in the COVID period and will no doubt continue to evolve. As a guide to investment leaders, organisations should do the practical things well, such as setting out precise work parameters, interpret metrics thoughtfully and fairly, and give feedback on how things are working. The Future of Work report also recommends building and maintaining a people-centric cultural identity. Organisational values should include fairness and trustworthiness, which will help to underpin trust in the investment management industry as a whole,” she said.

Surprisingly, the report found that investment professionals value being rich less than the general population and value doing good for the benefit of society more, when compared with responses from the World Values Survey.[^1] The Future of Work report includes data from a combined 9,000 investment professionals surveyed globally across two Future of Work surveys between March and May 2021.

“The fact that investment professionals prioritise impact and purpose over wealth may be a surprise to many, given they manage a huge amount of wealth on behalf of society. But the trend was clear, as shown by the graph below,” Carroll said.  “There are strong trends in the appetite for meaningful work amongst investment professionals. Organisations can capitalise on this opportunity to align organisational impact with the desire of their employees.”

Other key fundings from the report include:

• Leaders must ask the tough questions; they should review why their organisations exist and the shape and texture of its identity, including its purpose and vision, history and legacy, and artifacts and stories.
• The new sustainability paradigm makes cultural adaptation more urgent. The challenge of blending risk, return, and real-world impact requires a cultural commitment to sustainability through the lens of professional excellence and organisational values.
• Investment organisations should build a robust talent strategy; acquiring, developing, and retaining talent are important. The cultural value of investing in employees builds better talent, and it improves an organisation’s ability to retain staff.
• Investment organisations should take a balanced approach to compensation to strike the right balance that is not unduly geared to commercial success and has more stakeholder components.
• Investment organisations should work together for impact and leaders should build a wide network of cooperative relationships that allow the real-world impacts from sustainable investment initiatives to be scaled up.
• No greenwashing. Organisations need to apply the very highest standards of accuracy and ethics in all sustainability reporting and ensure that the benefits and costs of sustainability practice are communicated without undue bias and with appropriate context.

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[1] World Values Survey.

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“I’m honored to assume the role as Chair of the CFA Institute Board of Governors and continue the vital work of the governors, the Leadership Team, and the global membership to maintain the highest professional standards of our industry,” said Mark Lazberger. “My long-standing relationship with CFA Institute provides me with a unique perspective on the critical importance of the organisation’s vision and future, and I look forward to furthering these efforts on a global scale in partnership with my colleagues on the Board of Governors.”

Margaret Franklin, CFA, President and CEO, CFA Institute, said: “At the start of the new fiscal year, I am filled with optimism for the ways we can leverage learnings from the challenges of the past year and a half to propel CFA Institute forward. We have honed our strategy to guide us forward to further shape the future of the industry and the profession. We will continue to build out a diverse portfolio of learning products and modernize and grow the CFA Program. And we will focus our thought leadership on market resiliency, sustainability and ESG, financial technology, data and analytics, and on the future trends and behaviors that will change our industry. I look forward to working alongside Mark, Tricia, and our entire Board to deliver on our mission, and I am confident that their collective perspectives will prove invaluable in the months and years ahead.”

Lazberger is the Chairman at Omnia Capital Partners, based in Sydney, Australia. He also holds non-executive Director positions at Yarra Capital Management and Fisher Funds Management. He also serves as a Director for the Children’s Cancer Institute.

He previously served as the Chief Executive Officer of Colonial First State Global Asset Management and First State Investments, now known as First Sentier Investors, and oversaw more than $160 billion in funds and assets under management across equities, debt, infrastructure, and property. Prior to that, Lazberger was president, international, and executive vice president of State Street Global Advisors. Before this, he was head of international businesses, president and CEO of State Street Japan, and a Principal and regional managing director of State Street Global Advisors’ businesses in Japan and Australia.

In his prior Board service at CFA Institute (FY2012-FY2018), Lazberger served on various Board Committees including the Audit and Risk Committee, the Compensation Committee, and the External Relationship and Volunteer Involvement Committee, among others. He is also the Founding President and Member of CFA Society Sydney, a former board member of CFA Society Japan, and a member of the Future of Finance Advisory Council. Lazberger earned a Bachelor of Commerce from the University of Western Australia.

Tricia Rothschild, CFA, of Chicago, Illinois will serve as the Vice Chair of the Board of Governors. She previously served as the President of Apex Fintech Solutions, where she was responsible for the strategic planning, development, and overall growth of the company. She is the former Chief Product Officer and Co-Head of Global Markets at Morningstar and is currently an advisor to The TIFIN Group and a board member of the Financial Fitness Group. In her volunteer capacity at CFA Institute, she’s served as the Chair of the Risk Committee, on the Audit and Risk Committee, and on the Governance Committee. Rothschild earned a Bachelor of Science from Northwestern University and Master of Arts from Indiana University.

Board of Governors Roster

The FY2022 CFA Institute Board of Governors comprises a diverse group of 14 members who reside in eight countries, namely: Australia, Canada, China, Germany, India, Malaysia, United Kingdom, and the United States. CFA Institute membership elects officers for a one-year term and Governors for a three-year term that runs from September 1 to August 31. The full list of members for the new FY2022 term is:

• Mark Lazberger, CFA, (Australia), Omnia Capital Partners
• Tricia Rothschild, CFA, (United States), Advisor, The TIFIN Group and Board Member, Financial Fitness Group
• Marshall Bailey, CFA, (United Kingdom) Non-Executive Chairman, MUFG Securities EMEA plc
• Alexander Birkin (United Kingdom), EY
• Dan Fasciano, CFA, (United States), GW&K Investment Management
• Margaret Franklin, CFA (Canada), President and CEO, CFA Institute
• Joanne Hill, PhD, (United States), Cboe Vest
• Heinz Hockmann, PhD, (Germany), Senior Advisor and Member, Advisory Council, Lovell Minnick Partners LLC.
• Punita Kumar-Sinha, PhD, CFA, (India/United States), Pacific Paradigm Advisors LLC.
• Yimei Li, CFA (China), China Asset Management Co. Ltd.
• Karina Litvack (United Kingdom), Non-Executive Director, Eni s.p.a.
• Geoffrey Ng, CFA, (Malaysia), Fortress Capital Asset Management
• Diane Nordin, CFA, (United States), Director, Federal National Mortgage Association
• Maria Wilton, CFA, (Australia), Director, Victorian Funds Management Corporation

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Lisa Carroll

CFA Institute, the global association of investment professionals, has released the first report in a four-part research study examining the changes that investment organisations and professionals are likely to adopt post-pandemic, influenced by three critical elements: the context of careers, the content of work, and the culture of organisations.

In the report, The Future of Work in Investment Management, ^[1] workplace transformation is evaluated through the lens of the “what, where, and how”, with these factors evolving simultaneously and at a rapid pace during the pandemic. The report explores how the pandemic has impacted individuals’ attitudes toward their workplace environment, with implications for employers globally, as employees return to the office in some locations.

“Within the investment industry, the time is ripe to challenge the norms that have long driven our daily work lives. The way that we work must adapt,” said Margaret Franklin, CFA, President and CEO, CFA Institute.

The future of work in investment management is in hybrid workplaces. Among women, 87 percent agreed that they would like to work remotely part of the time, compared with 80 percent of men. Those earlier in their careers, with less than two years since earning the CFA charter, were least likely to want to work remotely, given that it is more difficult to learn from others in a remote environment, without the benefit of a robust professional network.

Lisa Carroll, CEO of CFA Societies Australia, said the pandemic has provided an opportunity for employers and employees to reconsider the future of work in financial services, with remote working now the norm.

Investment jobs have been resilient during the COVID disruption and Australia is no different. Just 10 per cent of professionals saw their employment status change because of COVID-19. That highlights that investment roles are well suited for remote working. We are seeing evidence of that during the current lockdowns in Sydney and Melbourne, where investment professionals are successfully getting on with their jobs from home,” she said.

“However, the study revealed that 20 per cent of Australian respondents have experienced a reduction in their total compensation since January 2020,” she said. On the positive side, 75 percent of investment professionals are confident their jobs will be secure over the next 18-24 months.

At the same time, remote working has created an urgency for new skills, with 91 per cent of professionals saying it is important for them to actively develop new professional skills. However, less than half receive support from their company to do this. “The onus is on organisations to adapt to the demands of the new environment and to support their employees and their professional learning,” said Carroll.

Given the blurring of home and work life, many investment professionals worked more hours during this time, leading to burnout. The number of respondents working more than 60 hours per week nearly doubled during the pandemic to 15 percent from 8 percent. Investment leaders were unanimous in their concern that mental health issues were the greatest threat to employees wellbeing.Not surprisingly, 82 percent of those surveyed expect to be heavy users of video calls in the future while expectations are that business travel will be permanently reduced by 25 to 50 percent. The report further explores the key three themes of workplace transformation:

• The Context of Careers – Where work gets done: Employers support their workforces’ desire to work remotely, with strong support for remote-work policies jumping from 15 percent pre-pandemic to 77 percent post-pandemic. Overall, investment professionals believe that remote work has increased their efficiency (53 percent). This adaptability applies across roles including those who were thought to be incompatible with remote work, such as chief financial officers and traders. The structure of investment management roles also indicates that they are well suited to a hybrid environment.
• The Content of Work – What works gets done: Modes of client communication will see significant changes with much more video conferencing. Yet investment professionals do recognise that the increased use of technology poses real risks, with 59 percent stating regulators will increase scrutiny of financial technology tools as hybrid models become more widespread. Investment professionals also recognise the need for professional development to further their careers.
• The Culture of Organisations – How work gets done: Many investment organisation leaders recognised a silver lining of the pandemic, with 59 percent citing that culture has improved because their staff have learned more about their colleagues. Yet, 100 percent of investment organisation leaders reported that mental health issues were a top concern as it relates to their employees, quickly followed by the impact of childcare and eldercare support (cited by 80 percent) on their staff. Notably, investment professionals reported a shift in what motivates them most at work, with workplace flexibility and having good team members becoming more important – this could be a direct result of the social isolation of the pandemic.

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[1] https://c212.net/c/link/?t=0&l=en&o=3175623-1&h=1128473786&u=https%3A%2F%2Fwww.cfainstitute.org%2Fen%2Fresearch%2Fsurvey-reports%2Ffuture-of-work&a=The+Future+of+Work+in+Investment+Management

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