Renowned Yale economist and best-selling author Robert J. Shiller recently issued a simple but important call for college graduates headed for careers in finance: “… never lose sight of the purposes and overriding social goals of finance.”
Shiller, who predicted the dot.com bust in the late ‘90s and the housing bubble, laments the financial sector’s low public esteem, thanks to “severe criticism — much of it justified — for thrusting the world economy into its worst crisis since the Great Depression” and “widespread resentment of financiers and the top 1% of income earners to whom they largely cater (and often belong).”
Indeed, there has never been a more critical time for individual professionals to assume accountability for the collective integrity of the finance industry — from the newly minted finance graduates Shiller addresses to the larger community of existing professionals. As noted in a prior blog post, I strongly encourage my own children, yours too, to enter this industry for the right reasons.
That’s why we’re calling on the investment profession to take personal responsibility for restoring investor confidence and public trust. Along with encouraging firms to adopt the Asset Manager Code of Professional Conduct, we’ve unveiled the “Integrity List,” a collection of 50 tangible steps that investment professionals can take to restore trust in the industry. The list was inspired by “real-world” ideas from CFA charterholders and members, including:
- Commit to a gold standard code of ethics and professional conduct such as the CFA Institute Code of Ethics and Standards of Professional Conduct.
- Place the client’s interests before your own.
- Name and shame unethical behavior.
- Help clients focus on risk as much as they do on performance.
- Strive for a conflict-free business model.
- Advocate for stronger regulations that protect investors.
- Act with integrity 24/7 — not just at the office.
Focusing on these “back-to-basic” behaviors is vital in a long-term effort to stamp out unethical behavior and reconnect our profession with the public interest. How well we succeed rests largely with the next generation of investment professionals, which is why Shiller’s message for recent finance grads strikes such a chord:
“Finance, at its best, does not merely manage risk, but also acts as the steward of society’s assets and an advocate of its deepest goals. Beyond compensation, the next generation of finance professionals will be paid its truest rewards in the satisfaction that comes with the gains made in democratizing finance — extending its benefits into corners of society where they are most needed. This is a new challenge for a new generation, and will require all of the imagination and skill that you can bring to bear.”
Hear, hear, Mr. Shiller! Hear, hear!