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CFA Institute chief minces no words about blaming and shaming bad behavior

Investment industry can blame itself if Occupy Wall Street fires back up this summer, according to John Rogers' remarks

Monday, May 7, 2012 – 9:10 PM by Brooke Southall
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John Rogers: I’m not up for enduring another awkward summer of Occupy Wall Street.

Brooke’s Note: I have a real appreciation for the CFA Institute. See: How 10 top groups define 'fiduciary’. I have seen various on-paper things that have contributed to my favorable impression but it’s been baked into my cake since the mid-1980s. It was then that some of my brightest classmates, heading for big Wall Street careers, would — for years and years — miss out on the festivities of Memorial Day weekend because they were in the throes of trying to prepare for and pass the rigorous exams related to being designated a CFA. Some didn’t pass and some never did. As someone wanting to play volleyball, this was bad. As a consumer, part of the business and observer, it lent major credibility to this group who apparently are willing to make sacrifices to turn themselves into careful and caring financial professionals. That such a group is stepping up as a take-no-prisoners agitator for fiduciary change is a positive turn of events.

Today, at the CFA Institute’s 65th Annual Conference in Chicago, John D. Rogers issued a fiery call for action to 300,000-plus stakeholders of the CFA Institute around the world, pushing for the finance profession to take responsibility to restore investor trust and reconnect with the public interest. There are about 100,000 holders of the CFA designation.

Though the CFA Institute has always demanded high professional standards, Rogers, its president and chief executive, took the message to a broader constituency when he delivered his speech to the 1,800 or more investment professionals attending the CFA Institute Annual Conference in Chicago. The centerpiece of his speech was an “Integrity List” that calls for his constituents, and those in the broader financial services industry to go above and beyond in their efforts to recapture the public trust.

Taking it to the Street

“Personally, I’m not up for enduring another awkward summer of Occupy Wall Street,” Rogers told the crowd. See: RIABiz takes on Occupy Wall Street in New York and finds investors wanting answers. “I’m sick of having our profession besmirched. I’m angry that the public can’t see the good work that thousands of professionals do every day. What is the root cause of these problems? Well, it’s a failure of self-control. As Walt Kelly’s cartoon character Pogo says, 'We have met the enemy, and it is us.’”

More specifically, Rogers is trying to make his group a more universal, agitating force for change, according to a spokesman for the group in an e-mail.

“This effort is more about CFA Institute telling the industry, not just its members, that more needs to be done. Second, this is all about the CFA Institute reminding its members and candidates that while they may do the right thing every day, they have a responsibility to ensure that others do the same and to educate their peers, clients, supervisors about how CFA Institute can be a resource in doing so. The Integrity List is the perfect example of what CFA Institute members do day in and out to ensure their clients’ trust and what the global industry must do to step up.” “See: One-Man Think Tank: Being a fiduciary is suddenly in style, even as lawmakers dance around the issue.

Fine print in the social contract

· Require training on ethical decision-making for yourself and your firm.
· Place the client’s interests before your own.
· Name and shame unethical behavior.
· Recommend products with transparent payoffs, costs, and risks.
· Help clients focus on risk as much as they do on performance.
· Disclose your educational achievements and how you improve professional competence.
· Strive for a conflict-free business model.
· Advocate for stronger regulations that protect investors.
· Act with integrity 24/7 — not just at the office.

Rogers encouraged investment professionals to share the list with colleagues and actively use it in professional practice.

“Your business exists thanks to a social contract granted in exchange for an expectation of professional services. Our firms will thrive if we offer services that truly help clients. If our companies engage in money games and place owners’ interests before clients, they will not fare well.”

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