The Board of Directors serve a critical leadership role in the CFA Societies by providing strategic direction to carry its mission and vision in Australia by coordinating the needs of society members with the rapidly changing environment of the investment industry.  Its independent voice aims to promote the integrity and efficiency of the capital markets that underpin the investment profession and the broader Australian economy.

CFA Society Sydney

CFA Society Sydney is pleased to announce that Charles Wu, CFA, (a photo is included in the attached document) has been appointed President following the Annual General Meeting. Mr Wu is the Deputy Chief Investment Officer and General Manager Defined Contribution Investments at State Super.

“I am excited for this extraordinary opportunity to serve my fellow members, volunteers and the greater finance community as I begin my term as President of CFA Society Sydney. I look forward to deepening our impact locally and nationally,” said Mr Wu.

New appointments to the Board of Directors include:

• Raj Gohil, CFA, as Vice President. Mr Gohil is the Head of Macquarie Investment Management in Australia.
• James Cowper, CFA as Treasurer. Mr Cowper is the Director, Principle Advisory Services.
• Rein van Rooyen, CFA as Brisbane Director. Mr van Rooyen is the Head of Investment Performance & Operations, Group Governance, Q Super.

CFA Society Sydney would like to express its gratitude to departing board members, Anthony Serhan, CFA, Michael Brivulis, CFA, and Jake Koundakjian, CFA. The Society thanks them for their support while serving on CFA Society Sydney’s Board.

CFA Society Melbourne

CFA Society Melbourne has made the following appointments to the board with experienced industry leaders:

• Brett Elvish, CFA as Treasurer. Mr Elvish is the Founder and Director, Financial Viewpoint.
• Rob Fowler, CFA as Programming Chair. Mr Fowler is the former Chief investment Officer, HESTA.

CFA Society Melbourne thanks departing board members Graeme Bibby, CFA, Thomas Tam, CFA, William Nigro, CFA, and Leila Lee, CFA, for their service on the Board.

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Anthony Serhan

Pendal, the global investment manager formerly known as BT Investment Management, has announced the appointment of Mr Anthony Serhan as its Head of Distribution in Australia.

Mr Richard Brandweiner, CEO, Australia at Pendal, said, “I am delighted to announce the appointment of Anthony to this key role in the Australian business. I am confident he will provide the leadership required to help us execute on our sales strategy and contribute to the delivery of our overall business strategy.

“His extensive commercial and technical experience from both an institutional and retail perspective, coupled with a strong understanding of investment markets and products, made him the ideal choice for the role.”

Mr Serhan has more than 30 years of investment and financial services experience and is currently the Managing Director, Research Strategy Australasia for Morningstar, responsible for the development of research and commentary about investment themes and trends across the Asia-Pacific region.

Since joining Morningstar in 2003, he has held several roles, including: CEO Morningstar Australasia; Managing Director, Ibbotson Associates (now Morningstar Investment Management).  Prior to this he also worked for investment research firm ASSIRT, AMP Consulting and Mutual Benefit Consulting.

Mr Serhan is a CFA Charterholder, holds a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia and a Bachelor of Business in Finance & Economics from the University of Technology, Sydney.  He is also a graduate member of the Australian Institute of Company Directors.

Reporting directly to Mr Brandweiner, Mr Serhan will be a member of Pendal’s Australian leadership team and be based in Sydney.

He will commence with Pendal Group in late 2018.

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Anthony Serhan

CFA Institute, the global association of investment professionals that sets the standard for professional excellence, is using its second annual ‘Putting Investors First’ (PIF) month to highlight the impact of Australia’s mandated superannuation, which creates a unique financial system where every worker is an investor.

According to CFA Institute, this unique financial system puts greater emphasis on the need for ethical behaviour and doing the right thing by investors. It says more should also be done to build awareness among Australian consumers and to help them understand that their interests should be placed above all others.

CFA Institute is using its PIF month to bring investment professionals together to show such commitment to placing investor interests first, with the Australian CFA societies hosting relevant events throughout May.

Mr Anthony Serhan, President of CFA Society Sydney, said “Mandated superannuation makes Australia a different playing field compared with its global counterparts where private investment is paramount. Ultimately, it can mean financial advice has a greater impact on investors here.”

“Private investors often manage their own wealth and are more sophisticated investors in their own right. They tend to be less dependent on financial advice compared to those who are less aware of what is happening with their finances. And when it comes to superannuation, we know a number of Australians need a better understanding of where and how their money is invested.

“It is our aim to continue the debate in Australia and protect the interests of investors above all else, by instilling high standards of ethics and professionalism in industry executives and firms from the outset,” Mr Serhan said.

One of the major issues when it comes to the relationship between investors and financial advisers is the extent to which their interests are aligned because of conflicted remuneration models and product integration.

“The major legislative reforms currently underway will make significant strides for our profession, however we need a multi-layered approach that instils ethical culture throughout the industry.”

CFA Institute aims to do more than prepare and educate professionals by building partnerships with institutions to raise standards of practice at all levels of the industry.

In light of this, CFA Institute is urging companies to sign the Statement of Investor Rights, a ten point document highlighting what consumers should expect from a financial planner such as objective advice, disclosure of conflicts of interest, and fair and reasonable fees. The Statement is intended to help investors demand that financial professionals abide by these rights.

“By demanding that financial professionals abide by these principles we are building investor trust and ensuring integrity in investment professionals,” said Mr Serhan.

‘Putting Investors First Month’ is part of the CFA Institute Future of Finance initiative, a global effort to shape a trustworthy, forward-thinking financial industry that better serves society.

For more information about the ‘Future of Finance’, ‘Putting Investors First’ month and the ‘Statement of Investor Rights’, please visit www.cfainstitute.org.

CFA Societies of Australia will be running numerous events throughout May including conference focusing on long-term investing in Sydney on 26 May, and events featuring Mr Tony Neoh aimed at industry leaders, employers and charter holders between 19 and 26 May in Melbourne and Perth.

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Anthony Serhan

Australian investment professionals are among the most pessimistic in the world when it comes to expectations of future employment, and nearly a quarter say the situation is getting worse.

This is the industry reality the world’s leading association of investment professionals, the CFA Institute, is flagging. The figures come from the 2015 Global Market Sentiment Survey (the Survey), which collates responses from over 5,200 leading investment professionals around the world.

According to Anthony Serhan, President, CFA Society of Sydney, the real conundrum lies not in what the Survey reveals about market sentiment, but in finding answers to the question it prompts: what can investment professionals do to compete?

“This is particularly the case in the face of growing concerns about continued economic weakness at home, including the latest unemployment figures,” he said.

Speaking about the implications of the Survey findings both on the broader industry and for career-focused individuals, Mr Serhan said that differences between local and global responses were revealing and sometimes unexpected.

“Only 15% of Australian investment professionals expect employment prospects to improve, which means we’re out-gloomed only by Brazil (14%), Switzerland (13%) and Germany (12%). I would however point out that while the Australian figure is relatively low, it also represents an upswing, with twice as many people positive about employment prospects compared to 2012,” he explained.

Looking at the cheerier end of the spectrum, the major developing economies of India and China have more to smile about with their employment prospects than their global counterparts, with 77% and 60% of respondents respectively expect their job prospects to increase.

“These are high figures, but in the context of their expectations of GDP growth, not surprising,” said Mr Serhan. “Chinese respondents anticipate GDP growth of 6.2% and India 5.8%, figures which far exceed the anaemic 1.6% from Australians.”

Mr Serhan went on to say that Australian expectations of deterioration in labour market conditions were perhaps even more telling than those of their more optimistic counterparts.

“A quarter of Australians expect a decrease in employment opportunities in financial services, although this is positively upbeat compared with the Netherlands, where 43% expect conditions to worsen, and Switzerland, where 40% do,” he said.

According to Mr Serhan, while these findings reveal a difficult year ahead, investment professionals can actively improve their prospects in the face of fewer job opportunities.

“Candidates who can demonstrate a competitive advantage, such as a better education, the right kind of on-the-ground experience and a demonstrated commitment to upholding high ethical standards will secure the best jobs and have the greatest chance of long-term success. This very issue – that of the optimum intersection of education, experience and ethics in the industry – is a question currently being debated in the Australian industry. And the CFA welcomes that debate.

“While the jury is still out on where some of this discussion will land, what we do know for sure is that it’s up to the industry as a whole to place more emphasis on all three key factors: education, experience and ethics,” he said.

Employers, too, have a vital role to play.

“Employers should be demanding a calibre of person who can objectively demonstrate that they have these factors covered. They should also be contributing to the betterment of the industry as a whole by demanding high standards of ongoing professional development, staying abreast of the best market intelligence and being open to networking and exchange of ideas with likeminded professionals,” explained Mr Serhan.

He finished by saying that it is understandable that Australian investment professionals are concerned about their employment prospects in 2015 – but focusing on what is in their control is a great place to start.

“Undeniably the industry is in a state of challenge and change. There are steps needed on many levels to bring it up to speed and achieve the potential it so clearly offers. One of those steps however is making sure intellectually robust and rigorous international qualifications become more widely agreed upon and sought after. While there’s no single fix to guarantee either industry or career success, this would certainly make it far more likely.”

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Anthony Serhan

The financial services industry in Australia is at a turning point and the crisis of trust must be addressed now, with leadership from the top.

So says CFA Institute, the leading global association of investment professionals, which today applauded the role of government, regulators and the media in applying pressure to the industry, and highlighting gaps and challenges that CFA charterholders have been raising for years.

According to Anthony Serhan, President, CFA Society of Sydney, while reforms such as Future of Financial Advice (FoFA) have improved transparency, legislation alone is never enough to guarantee that all investment professionals will act in their clients’ best interests.

“What we really need is a multi-layered approach, by which I mean complementing legislation with other ways of ensuring that high ethical principles and professional standards inculcate the culture of our industry,” Mr Serhan said.

And, according to Mr Serhan, improvement is required on a global level, because the lack of trust in financial services extends far beyond our shores.

“The CFA Institute 2015 Global Market Sentiment Survey, which collated responses from over 5,200 global investment professionals, showed that 63% of all respondents (and 67% of Australian ones) said that a lack of ethical culture within financial firms was the single biggest reason for the current lack of trust,” he said.

Mr Serhan went on to say that when the same respondents were asked how they would address the problem, the answers were equally revealing. A third of respondents (31% globally, and 36% in Australia) said that compensation should be better aligned with investor objectives, and 27% (25% in Australia) said that a zero-tolerance policy by management for ethical breaches was essential.

“These results point to an issue that CFA Institute has been acting on for years, the fact that compliance is not a nuanced concept. If we are to earn trust from investors, ethical and literal compliance must be treated as equally important and equally enforceable.

“This means that employers must step up, create a culture of ethical compliance, and enforce it rigorously.

“That isn’t to say that the burden falls entirely on employers. Vigilant, proactive regulators are also crucial, but one of the most interesting revelations from this year’s survey is that ‘unethical firm culture’ is seen as the true culprit when it comes to lack of trust, more so than any failure of government regulation,” Mr Serhan explained.

At the same time, Australian investment leaders clearly want to see a stronger ASIC, better able to enforce current laws. On the other hand, they are generally positive about the quality of corporate governance. Twenty-six per cent of Australian respondents said that improved enforcement of existing laws and regulations would help improve investor trust at home, with 20% citing improved corporate governance.

This was in stark contrast with the situation in Japan, where the need for stronger corporate governance is clearly a much bigger issue. Fifty-six percent of Japanese respondents said that stronger corporate governance was crucial if investor trust is to be improved.

Mr Serhan agreed that good corporate governance is important, but said that employers who are serious about addressing issues of trust should understand that better education is a key plank in any improvement platform. It is an area in which CFA Institute is well qualified to comment.

“The CFA qualifications are among the most robust in the world – and not just from an intellectual standpoint. They encompass far more than quantitative-based investment skills that too often take the fore in discussions about qualifications and education. Unless ethical components are inextricably woven through the academic component – it’s no more protective of the profession than any other pure educational qualification,” he said.

“And, just as important as that initial qualification and education is the subsequent employment experience and the ethical culture it entails. It is precisely the area that we need role models and leaders.”

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Anthony Serhan

Australian investment leaders and their global colleagues are united when it comes to expectations about oil prices and the most favourable global equity markets in 2015, but are at odds about the importance of interest rates, world GDP and emerging market economies.

This is according to CFA Institute, the world’s leading association of investment professionals, following the release today of the Australian results of its 2015 Global Market Sentiment Survey.

“The similarities and differences between global and local respondents’ views on the same issues are in some cases very revealing,” said Anthony Serhan, President, CFA Society of Sydney. “Certainly they can help investment leaders gain a clearer picture of what to expect in 2015, both near to home and globally.”

The global survey collates insights from over 5,250 CFA-member investment professionals worldwide. It covers their views of both local and global economies, reveals investment sentiment, predicts likely performance of world markets and identifies major perceived risk factors for the year ahead.

The newly released Australian version pulls out local data to provide a clear picture of how Australia’s investment leaders view the 2015 landscape.

The significance of interest rates was a key point of difference between Australian respondents and others, with Australia one of only two countries (along with South Africa) to cite a rise in interest rates as the major risk to global markets in 2015.

According to Mr Serhan, this finding is worth noting.

“Global annual inflation rates continue to remain low and leading economists have suggested that falling bond yields and lower levels of global growth may instead produce the reverse, a risk of deflation,” he said.

“One could argue about the source of this concern and perhaps even its validity, however what does seem clear is that for investment professionals, interest rates are a factor that may affect decisions as we move ahead in 2015. Ultimately I think this reflects the importance of US markets and the real question over what will happen to financial assets globally when rates do rise in that market.”

Where Australian investment professionals were firmly in line with the rest of the world was on oil prices. More than half of all those surveyed predicted the drop – but none to its full extent.

Mr Serhan said such findings shine a spotlight on the rapidly emerging debate and discussion du jour: is the fall in oil prices temporary, driven by sentiment or short term conditions, or evidence of a longer term structural shift?

“It seems that everyone was surprised by the freefall in the price of oil, which almost halved between October and January. Although we are experiencing a bounce now, investors continue to question where the price will end up and the wide-ranging flow on effects across all markets,” he explained.

On the world economy, Australians take a somewhat different view from many offshore colleagues and the World Bank. While the latter is predicting global GDP growth of 3.0% in 2015, fewer than 30% of survey respondents agree – and Australians are among the most dubious of all.

Australian predictions put both global and domestic GDP growth at 1.6%, making us less bullish than many others, but not out-and-out bears, either.

“Australian analysts and charterholders were the only ones to put global and domestic growth at the same level for 2015, and among the few in developed countries not predicting underperformance from their domestic economy. In Europe and Japan, for example, respondents predicted significant differences between local and global growth. This appears to indicate a fundamental pessimism about the ability of their own economies to perform, and a reliance on other countries to provide much-needed stimulus, which is absent closer to home,” Mr Serhan said.

When it came to risks for the local economy, Australian respondents saw the biggest threat as weakness in emerging market economies (33%).

While not surprising given our economic reliance on China, Mr Serhan said that, at the same time, Chinese equity market performance ranked as a top pick (9%), second after those of the United States (33%). So it’s not all bad news out of China.

“On the flip-side, when it came to identifying positive influences in our domestic economy, accommodative central bank policies (28%) and an increased focus on job creation (25%) were cited as factors most likely to support capital markets,” Mr Serhan explained.

“And the recent interest rate cut indicates that the RBA may well agree.”

In conclusion, Mr Serhan said this year’s Survey provides important insights into key economic and market themes guiding investment professionals in some of our leading organisations. The quality of the data coming out of the CFA survey makes it a particularly worthy barometer.

“With nearly 120,000 members globally, CFA Institute is ideally placed to bring together the most experienced and highly qualified investment minds from around the world and to highlight the big issues affecting global markets,” he said.

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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…

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

Click here for a printable copy of the Statement of Investor Rights.

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CFA Societies Australia will be highlighting the importance of putting investors’ interests first during its upcoming Investor First Week from 12 – 16 May.

Investor First Week is part of CFA Institute’s global Future of Finance initiative, a long-term effort to shape a trustworthy, forward-thinking financial industry that better serves society. The initiative aims to provide the tools to motivate and empower the world of finance to commit to fairness, improved understanding, and personal integrity. Sydney, Melbourne, Perth and Auckland will join more than 50 cities around the world, where CFA societies representing more than 35,000 investment professionals will mark the global initiative during May.

During Investor First Week, CFA Societies Australia will be focusing on several constructive initiatives in the Australian market to improve standards and safeguard investors’ rights, including a code of conduct for asset managers, and a statement of investor rights.

Anthony Serhan, Managing Director, Research Strategy, Asia-Pacific at Morningstar and Vice President of CFA Society of Sydney, said, “Investor First Week is about emphasising that all participants in the financial sector, globally and in Australia, should put investors first – a prerequisite for improving investors’ trust in the financial system.

“More focus on ethical principles and standards is essential across the financial services industry to regain the trust of investors, particularly in the provision of advice.

“At a time when the concepts of best interest and reasonable basis have been hotly debated in the context of the Future of Financial Advice reforms in Australia, Investor First Week highlights the need for the industry as a whole to hold up both of these principles.

“A fully functioning and efficient market is built on trust. Clients rely on advisers, advisers rely on analysts and asset managers and they, in turn, rely on issuers of securities. A lack of confidence in any one area can have a meaningful impact on others. That is why the principles attached to the Future of Finance remain an important backbone of the industry fabric.” Mr Serhan said.

To help launch Investor First Week, Michael Woodford, Former President and CEO of the Olympus Corporation will speak to CFA members and the investment community in Australia next week about the importance of governance and ethical principles.

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The aim of the report is to encourage dialogue about global best practices for managed funds from the perspective of fund investors.

Morningstar researchers evaluated and scored countries in four categories: regulation and taxation, disclosure, fees and expenses, and sales and media, based on a combination of factual research and interviews with Morningstar analysts in each country.

Each country was then graded on a scale from A to F for each of the four topics, and these grades were then combined to form an overall grade. The report is not a commentary on a country’s managed funds industry, as there are many factors besides industry behaviour that can affect an investor’s experience.

“We launched the first Global Fund Investor Experience Report in 2009 to examine the treatment of managed fund investors in 16 countries, with the goal of advancing a dialogue about best practices worldwide. Since that time, we’ve had numerous conversations with regulators and fund managers in multiple countries about their existing policies and ways to improve,” said Morningstar Australasia Chief Executive Officer Anthony Serhan.

“Working with our analysts around the world, we expanded our survey to 24 countries this year. We hope our findings will help fund managers and regulators around the globe continue to focus on improving the environment for investors.”

Australia
Australia scored a C+. Australian investors enjoy low costs and favourable sales practices from a global perspective, but disclosure practices are comparatively weak and tax costs relatively high.

Australia fares very well with respect to fees and expenses. Australian share, multi-sector, and fixed income funds are some of the least expensive globally.

Australia also fares well in the area of sales and media, benefitting from open architecture platforms and a variety of sales channels. The Future of Financial Advice (FOFA) regulations place a fiduciary standard requiring financial advisers to place investors’ interests ahead of their own. This protection is stronger than found in most of the world.

Australia is the last country in this report without any form of mandated, periodic portfolio holdings disclosure presently or in proposed regulations for managed funds. With global best practices being mandatory quarterly disclosure, Australia is very far from the mark. There have been positive steps, however, with voluntary disclosure standards well-advanced and a mandated requirement due to be introduced under the MySuper regulations.

Australia’s product disclosure statement misses some marks as a simplified prospectus. Nowhere in the disclosure is portfolio manager information available. The document also lacks standardised returns, and poorly describes investment strategy and risks.

Australian managed fund investors suffer some of the highest investment taxes of any country in the report. Australia is one of only a handful of countries in which capital gains are passed through to fund investors annually, rather than deferred, and accumulated in the gains in the fund unit price. Fund investors also pay consumption taxes on the investment management service.

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