Views on the integrity of global capital markets
05 June 2013

Restoring Trust in Finance: Remember “It’s Always Someone Else’s Money”

The financial industry today faces a crisis of confidence that threatens its future. Without trust, markets don’t function properly and growth prospects are limited. So what can the financial industry do to change its trajectory? A panel at the 66th CFA Institute Annual Conference in Singapore, moderated by CFA Institute CEO John Rogers, CFA, provided some answers.

Investment professionals must truly believe that client interests come first — and act accordingly. As Mark P. Delaney, CFA, chief investment officer and deputy CEO of the pension fund AustralianSuper stated: “The first thing is that it’s always someone else’s money.” He urged the audience to think about how they look after other people’s money and what goals their clients need to achieve. As an industry, he observed, the investment profession has lost sight of that purpose and replaced it with self-interest.

Read more on the Annual Conference blog

About the Author(s)
Rebecca Fender, CFA

Rebecca Fender, CFA, is head of the Future of Finance initiative at CFA Institute, a long-term global effort to shape a trustworthy, forward-thinking investment profession that better serves society. Prior to joining CFA Institute, Ms. Fender was a vice president at BlackRock working with pension funds and endowments, and she also worked at Cambridge Associates, where she published research about manager selection. She earned her undergraduate degree in economics from Princeton University and holds an MBA from the Darden School at the University of Virginia. Future of Finance publications include From Trust to Loyalty: A Global Survey of What Investors Want, and Gender Diversity in Investment Management: New Research for Practitioners to Close the Gender Gap. Previously, Ms. Fender also served as the director of the flagship CFA Institute Annual Conference.

1 thought on “Restoring Trust in Finance: Remember “It’s Always Someone Else’s Money””

  1. Lance Speck says:

    The industry has earned its lack of trust. There are far too many greedy thieves in the business. The industry is structured to rob investors. Starting with the fee structure: When you buy an automobile you pay the same price as everyone else. Warren Buffet pays the same price for an Audi as anyone else. But this industry charges larger clients more in absolute dollars than it does for smaller clients for exactly the same service. I think this meets the definition of theft.

    If clients were properly educated about the industry they would soon understand this wheeze and it would end quickly. The Institute owes it end customers this education. People in this business have gotten far too rich at the expense of their clients.

    Inappropriate fees have resulted in a proliferation of managers and a proliferation of useless products. The most egregious examples of which are hedge fund managers and their so called hedge funds. These guys have added no value to anyone for more than a decade. If Ford made the same bad car year after year they would be exposed quickly. Yet the likes of SAC have continued to survive long past the point where they were even remotely adding value.

    The Industry will not regain anyone’s trust until it comes clean. There needs to be a major shakeout. The Industry has too many players. Charges too much and mostly does nothing. Those who are not helping to stamp this out are part of the problem.

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