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After the 72nd CFA Institute Annual Conference, Paul Smith, CFA, reflects on the progress of CFA Institute over the last five years and looks ahead with great enthusiasm about what the future holds for the organization.


Overview

     

As I near the end of my tenure as your president and CEO, I took the opportunity in my keynote speech to look back and to look ahead. The following are some takeaways from my speech.

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    We welcomed around 1,900 attendees to this year’s conference in London, and I was struck once again by the enthusiasm and commitment of the members who attended from around the globe. It’s always a jam-packed schedule—we also hold our XL Society meeting, our Society Leadership Conference, and our Annual Meeting of Members in the days preceding the conference—but rather than feeling weary at the end of all the events, I left energised. We have an extraordinary group of global volunteers and members. 

    The theme of the Annual Conference was disruption, a force facing each and every one of us in the investment management industry. I noted that we can face disruption without losing sight of the values we hold dear. As I reflected on my association with this organisation, I commented how professionalism, purpose, client service, and ethics have always been at our core. These elements of our lives will never be disrupted; they are timeless. In all the years of our history, these foundations have been our North Star. Our founding members espoused these very themes.

    I took the opportunity in the speech to call for mandatory continuing professional development (CPD) for the ongoing maintenance of your charter. Why? Well, let’s start with a fundamental question: Do we want to be a profession or a club?

    Why should we strive to be a profession? It’s in our self-interest. By being a profession, we burnish our reputation and establish our value to the society that hosts us; after all, they, not us, are the ultimate arbiters of a profession. Society demonstrates that they believe us to be a profession by building a moat around the practice of investment management. This helps us establish our value. In return, we need to deliver a few things to be worthy of this designation: a credential, professional conduct, ethics, and a demonstrable commitment to lifelong learning. I know of no surer way of protecting the investment we have all made in acquiring the charter and making sure that this value grows over time.

    I firmly believe that we must make a continuing education requirement obligatory to further our journey to professionalism. We are working very hard to build out our educational offerings so that they can encompass other education we all do for other credentials and be relevant, costless, easy to consume, and, above all else, easy to record.

    The time frame for adoption is not yet certain, but I hope it will be within two years, so let’s start the conversation now. A member vote will be required on this initiative, and I hope it will meet with your approval when the time comes. I believe that should we fail to adopt mandatory CPD, then we will never fully achieve or deserve professional status and the charter will simply become a credential with a clubhouse attached. A club will be open to competition and, worse, to irrelevance.

    Over the last five years, our member and candidate numbers have grown very quickly and, as a result, we have been able to carry our mission into all four corners of the globe. But growth for its own sake is not the objective of a not-for-profit organisation. Our growth serves our mission of raising professional standards throughout the world and is a testament to the progress we have made toward that goal.

    Five years ago in my inaugural keynote speech as president and CEO, I asked the following questions: How can finance solve the problems of tomorrow? How can we pilot a sure path in conditions of uncertainty?

    As investment management professionals, we all rely on data. But those data are necessarily backward looking and of limited help in a turbulent, ever-changing world. We need to be brave and to actively seek out those areas where data are poor—and where the exercise of human judgment is key. We seem to have forgotten that this is the very objective of investment management.

    Nowhere is this need for courage and judgment more evident than in the area of sustainability, where the lack of complete and consistent data has held many back from investment opportunities. Yes, investing must produce returns. But investment must also flow to where capital is needed to solve the challenges that society faces. I hope that we, as an industry, will heed society’s call to help address some of the monumental challenges facing our planet. We surely have a higher purpose than simply striving to beat a benchmark index.

    Ethics remains foundational to us as charterholders. In my speech, I pointed out that although the industry’s reputation has recovered somewhat from the depths of the financial crisis, our industry still cannot seem to steer clear of trouble. We must remain vigilant and uphold the highest standards of ethics and professional conduct. Nothing less will do.

    I spoke of the need to improve in terms of diversity, noting that still only about 19% of charterholders globally are women. However, encouragingly, we are making progress at the candidate level: our Level I candidate pool now stands at 38% women globally. In 2015, that number was 32%. This is a sign of a brighter future.

    Diversity includes more than gender equality, of course. As leaders in our industry, we must be champions of diversity and inclusion in all of its aspects. A more diverse and inclusive workforce generates better outcomes for all. Numerous studies have borne this out. Cognitive diversity is key to successful investment returns for clients. I hope we can measure up in this regard too.

    In closing, I stated that I truly believe that we have a wonderful and unique opportunity to establish ourselves at the head of a profession that society truly values. It will take continuing hard work, courage, and obstinate consistency of purpose, but we have those values in spades. We can do this—together.

About the Author

Paul Smith, CFA
Paul Smith CFA

Paul Smith, CFA, serves as Advisor at CFA Institute. He previously served as President and CEO of CFA Institute.

Smith joined CFA Institute in 2012 as Managing Director for Asia Pacific, overseeing its expansion into China and India. He later assumed the leadership of its Institutional Partnerships division, which is responsible for engagement with key firms, groups, and associations in the global investment industry. He was appointed president and CEO in January 2015.

He brings extensive leadership experience in the investment management industry, having held a variety of positions in major financial centers over 30 years. Smith started his career in asset management at Ermitage International, an alternative funds management company, progressively taking up roles of increasing responsibility across Europe (London, Paris, and Dublin) over 11 years — the last seven as the firm’s CEO.

Smith moved to Asia in 1996, just as the region began to take off, to join Bank of Bermuda in Hong Kong as Asia head of securities services. In 2001, he was promoted to global head of funds services. After HSBC’s acquisition of the bank in 2004, he served as HSBC’s global head of alternative funds administration working in Hong Kong and New York, where he was responsible for the delivery of services to 2,000 investment funds with more than US$250 billion of assets.

He has also pursued entrepreneurial roles, most recently as founder and CEO of the Hong Kong-based hedge fund investment management firm Asia Alternative Asset Partners for six years prior to joining CFA Institute. Early in his career, he worked as an auditor at Pricewaterhouse in London.

With more than 20 years of experience in Asia, Smith is active in the region’s investment community and has served on the boards of a number of Asia-based funds over the years.

He is a CFA charterholder and a fellow of the Institute of Chartered Accountants of England and Wales. Smith holds a master’s degree in history from Oxford University.