Practical analysis for investment professionals
16 February 2015

Is Finance a Noble Profession? (Online Forum)

Whether or not finance is a noble profession is not a question arising solely because of the global financial crisis of 2008–2009. In my many years as an investment professional, I can attest that this question, and its variants, percolates to the surface frequently. Usually the conversation takes place among colleagues as we marvel at yet another tale of hubris emanating from our beloved profession. War stories are shared, eyes rolled, gasps emitted, and then we promise to never behave like the ignoble goblins sullying the good name of finance.

Why Finance’s Nobility Is an Important Issue

Yet, I believe this conversation deserves a public airing because:

  • Many nations still are reeling from the Great Recession — depending on where you live, it might even be a depression.
  • I have lived through too many financial crises — dot-com (2000), Asia (1997), various hedge funds, Mexico (1994), et al.
  • I am a student of economic history.

Perhaps more importantly, the most recent global results from the Edelman Trust Barometer indicate that trust in financial services ticked up by just 1%, to 54%, over the previous year. This result ranks finance as the third-worst industry evaluated, ahead of only banking and the media. Last, the credibility of financial analysts is falling, with just 53% of respondents trusting them.

In the past some industry pundits argued that trust in finance was simply a call option on market results. In other words, poor investment returns were equated with low levels of trust: that if you gave markets time to recover, then trust would be restored. But that just has not happened despite seven years having passed since the financial crisis and many market indices having doubled subsequently.

Unfortunately, all of capitalism rests on foundations of trust. If you do not trust your counterparty, you do not transact. If there are no transactions, then there are no markets. And if there are no markets, then there is no capitalism.

Is Finance a Profession?

Make no mistake, finance is a profession. Check your understanding of finance as a profession with this pithy definition from Wikipedia:

A profession is a vocation founded upon specialized educational training, the purpose of which is to supply objective counsel and service to others, for a direct and definite compensation, wholly apart from expectation of other business gain.

Likely you agree with me that finance is perched between those with capital (i.e., our clients) and those seeking capital, and that our function — I will repeat myself here, our function — is to supply objective counsel and service to others regarding their capital. But then there is that bit at the end of the definition that probably causes your pulse to quicken. Namely, “wholly apart from expectation of other business gain.”

The experienced among you likely see that finance is not in accord with this part of the definition. Too much of the activity of finance is not done for the benefit of clients. In some cases, even the activities of finance intentionally run counter to client interests (e.g., proprietary trading).

Future of Finance Online Forum

So the question at hand is: for finance to remain intact . . . for it to remain viable to the public . . . for its function within capitalism to propagate . . . does it need to ennoble itself?

To discuss these questions and more, I am hosting a Future of Finance online forum in this post over the course of the entire business day, Thursday, 26 February 2015. The Future of Finance is a global effort by CFA Institute to help shape a trustworthy, forward-thinking financial industry that better serves society. Helping to explore the issues and to answer the questions are the following thoughtful professionals, simultaneous believers in, and critics of, finance: Kim Ann Curtin, Richard Evans, Laura J. Rittenhouse, Graham Sinclair, and Stephen Viederman.

If you have a question for me, or for the panel, please post your questions in the comments section below. This article will serve as your anchor for the discussion as the discussion will unfold below the text of the post. See you 26 February 2015.


Kim Ann Curtin is an author, professional keynote speaker, executive coach, and founder of The Wall Street Coach. She helps C-suite executives accelerate their personal and professional achievement through consciousness, to help them become as successful on the inside as they are on the outside. Her first book, Transforming Wall Street, is slated for publication in March.

Richard Evans is the founder and general manager of SSR Health, LLC, a specialized investment research and strategic advisory firm focused solely on health care. Prior to founding SSR Health, Evans was a top-ranked Wall Street analyst covering pharmaceuticals for Sanford C. Bernstein. Before Bernstein he was a senior executive with Roche. Richard has a doctorate in veterinary medicine from North Carolina State University and a master’s in public and private management from Yale.

Laura J. Rittenhouse is founder, president, and CEO of Rittenhouse Rankings, Inc., a financial communications company that specializes in trust and reputation strategies that affect the corporate bottom line and market performance. She is also author of the book Investing Between the Lines, among other titles. Rittenhouse has been featured on CNN, CNBC, and Canada’s BNN, as well as in the Wall Street JournalUSA TodayBusinessweekForbes, and Barron’s. She has been chosen as one of the Top 100 Thought Leaders in Trustworthy Business Behavior by Trust Across America.

Graham Sinclair is principal at SinCo, the sustainable investment advisory boutique. He has a two-decade career on the buy- and sell-side in pension funds management and global institutional investment in the United States, Europe, and Africa. Since 2002, Graham’s specialty has been global asset management in the sustainability meta-theme. His recent projects covered private equity, infrastructure, and research and development innovation. His presentation “Investing as If the Future Matters” at TEDxTableMountain was listed among CFA Institute’s “Sustainable Investing: Five Videos to Watch” in September 2014. He holds an MBA from Villanova University and an LL.B from the Howard College School of Law.

Stephen Viederman describes his vocation as grandparenting, doing what he can to leave options open for his grandchildren and all children. Viederman retired in 2000 as president of the Jessie Smith Noyes Foundation where he developed and guided the effort to better align the foundation’s asset management with its grants, including some of the first “impact investments” in “responsible growth companies.” Viederman is chair of the Christopher Reynolds Foundation’s finance committee and is an active shareowner, leading discussions with ExxonMobil, Chevron, and Pfizer, among others, on political transparency and climate change mitigation and adaptation. He is also director and North American vice chair of the Network for Sustainable Financial Markets.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Photo Credit: ©iStockPhoto.com/sam_ding

About the Author(s)
Jason Voss, CFA

Jason Voss, CFA, tirelessly focuses on improving the ability of investors to better serve end clients. He is the author of the Foreword Reviews Business Book of the Year Finalist, The Intuitive Investor and the CEO of Active Investment Management (AIM) Consulting. Previously, he was a portfolio manager at Davis Selected Advisers, L.P., where he co-managed the Davis Appreciation and Income Fund to noteworthy returns. Voss holds a BA in economics and an MBA in finance and accounting from the University of Colorado.

Ethics Statement

My statement of ethics is very simple, really: I treat others as I would like to be treated. In my opinion, all systems of ethics distill to this simple statement. If you believe I have deviated from this standard, I would love to hear from you: jason@jasonapollovoss.com

9 thoughts on “Is Finance a Noble Profession? (Online Forum)”

  1. The finance community has an inherent problem — focus on $$$. How many financial analysts are democrats? How many did a degree in social work or related humanities fields? The perception of a money fixation will be an on-going issue, perhaps with some merit.

    1. Hello Charlie,

      Thank you for your impassioned comment. Finance is a global industry that transcends boundaries and proponents for improving it exist all along the political spectrum. I think the continuum most relevant here is not one’s political affiliation, but the degree of empathy. Also, at least in my experience it is rare in the investment business to find someone who isn’t well rounded, having an interest, yes, in finance, but also the humanities, history, geography, geopolitics, and so forth. One of the appeals to me of entering finance was that all of my interests could find value and expression in the industry. Put another way, those that understand the world best tend to make the best investment decisions. So the broader the interests, the greater the capacity to understand.

      Yours, in service,

      Jason

  2. “What Can be Done to Make Finance More Noble” suggests “ratings” of individuals and institutions be made public/accessible. Perhaps I’d change the wording but having listened to 1000+ people talk about their investment careers (I’m a search consultant) you may have reached a similar conclusion to ours: that these, in most cases, stellar people speak of their work with conviction, but one can often detect an underlying uneasiness about their contribution to investment performance, or, conversely, about the failure of employers or investors to consider them for one reason or another despite fairly consistent positive investment decisions.

    The reality is that most people lack a credible record of their investment decisions independent of one employer, which is why we developed myinvestmentrecord.com. I believe it is a concrete (first) step toward making the profession “more noble.”

    1. Hi Steve,

      Thank you for weighing in with your story. Having hosted the Online Forum I can hopefully clarify what was intended by the “ratings.” Investment performance record is certainly one way to evaluate the quality of an investment manager or adviser. The problem is that among an investor’s top 5 concerns, performance is third, and the other four criteria all relate to things, such as: finance pro has my best interests as their focus; finance pro speaks with a minimum of jargon; finance pro was recommended by a friend; et. al. In the forum it was proposed that these traits have no quantitative basis and therefore there is no way to factor it into an investor’s decision-making process. I hope that clarifies the points made during the event.

      Yours, in service,

      Jason

      1. Jason – You might agree that the priorities change for institutional clients, with performance moving up in the ratings. Hence our focus on a credible measure of personal contribution to performance and its relevance to a sense of ‘nobility’ among our institutional friends. I think hedge fund people especially would bear this out.
        Thanks to you and forum participants for speaking about this.
        Steve

        1. Hi Steve,

          Certainly, for institutional clients performance is likely preeminent. I did not intend, if I did, to slight your work. I was recapping the intent and thrust of the discussion I hosted.

          Keep up the good work!

          Jason

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