Views on improving the integrity of global capital markets
12 October 2015

1,200 Firms and Counting: Asset Manager Code Gains Global Foothold

Posted In: Asset Manager Code

Just over ten years ago CFA Institute introduced the Asset Manager Code of Professional Conduct with the goal of improving investor confidence through enhanced ethical conduct of investment management firms. In 2009, we required firms to notify us when they claimed compliance with the Asset Manager Code. With more than 1,200 firms registered today, it’s an opportunity to reflect on how we reached this point and future opportunities.

To get word out about the Asset Manager Code, CFA Institute initially engaged with asset managers, showing the investment industry the benefits of having a structured set of practices to demonstrate a firm’s ethical commitment to investment clients. But it was the asset owner community taking notice of the Asset Manager Code that ultimately caught the attention of investment managers.

So for the past few years, CFA Institute has worked to increase awareness within the institutional ownership community. We are enlisting these asset owners’ support to ask about Asset Manager Code compliance during the manager selection and review processes. As an asset manager, would you be caught off guard if one of your clients asked whether you comply?

As more asset owners, such as Illinois Municipal Retirement Fund and Washington State Investment Board, include questions about the Asset Manager Code in their RFPs, asset managers will further recognize the business rationale of compliance. How an investment firm demonstrates support of ethical best practices can influence asset owners’ decisions to hire a manager. And the tool for seeing which firms have claimed compliance just improved.

We’ve displayed firms claiming compliance with the Asset Manager Code on the CFA Institute website for several years. However, the page was limited to a flat alphabetical view of this information. Today, you have the ability to search for firms by name and/or location. Assets owners can quickly and easily find the investments firms that have committed to the ethical principles of the Asset Manager Code, and also identify those not on the list. Anyone can locate peers or competing firms headquartered in a specific city, province, or country in moments. (I hope you come back to read the rest of the post, as I know you have clicked the link to look for your asset managers or your investment firm.)

Who Is Registered?

We recently added four new countries (Nigeria, Papua New Guinea, Philippines, Sri Lanka) with Asset Manager Code-compliant firms, bringing the country total to 38.

While the breadth of countries with Asset Manager Code-compliant firms is large, the majority of registered firms are headquartered in the major capital markets. Countries with at least 10 registered firms include:

  • Australia
  • Brazil
  • Canada
  • Singapore
  • South Africa
  • United States
  • United Kingdom

Several prominent investment management firms submitted their acknowledgement forms last year, likely due to the increased focus on the Asset Manager Code by the institutional ownership community. Joining the ranks of Asset Manager Code-compliant firms: Northern Trust Investments Inc. and Legal & General Investment Management America Inc. registered in the United States, and for those investing in Australia, you are likely to recognize Colonial First State Global Asset Management.

Our outreach to asset owners also brought other interesting results. The New York State Teachers’ Retirement System agreed to inquire about the Asset Manager Code in its RFPs for investment managers. Because the organization internally manages a portion of its assets, it took the additional step of claiming compliance with the Asset Manager Code as well.

How Does a Firm Comply with the Asset Manager Code?

An investment manager must complete a three-step process:

  1. Compare the Asset Manager Code with your firm’s current practices.
  2. Make any needed revisions to firm practices to align with the Asset Manager Code.
  3. Claim compliance by notifying CFA Institute.

Our recent outreach has not been limited to the community of asset owners. Along with presenting to more than 200 pension board trustees at one conference and hosting multiple calls with leading officials of individual plans and endowments, we have targeted conferences for compliance professionals and due diligence specialists. Having both sides of an advisory agreement aware of the core principles of the Asset Manager Code help set clear expectations for conduct.

As the industry works to re-establish the trust necessary for the long-term success of global capital markets, we all have a role to play. The resources available from CFA Institute can assist owners in vetting the firms they hire and allow managers to test their current practices. As we work to encourage adoption of the Asset Manager Code, we expect the industry’s reputation to continuously improve.

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About the Author(s)
Glenn Doggett, CFA

Glenn Doggett, CFA, was a director of professional standards for CFA Institute. His responsibilities included providing member guidance in applying the ethics and standards of practice policies, supporting related educational and public awareness activities, and working with the Standards of Practice Council of CFA Institute on its initiatives. He was a co-host of the free, live, interactive webinars used by CFA Institute to promote ethical decision making and global best practices. Previously, Mr. Doggett, as a member of the CFA Institute Financial Reporting Policy Group, represented membership interests regarding reporting and disclosures initiatives, including XBRL. Prior to joining CFA Institute, he worked in the financial information sector with SNL Financial, where he focused on the real estate and energy industries, directing the development and maintenance of a financial data storage system. Mr. Doggett holds a BA in economics from the University of Virginia. He was awarded the CFA charter in 2006 and is a member of CFA Society Virginia.

1 thought on “1,200 Firms and Counting: Asset Manager Code Gains Global Foothold”

  1. Dorothy C. Kelly, CFA says:

    Congratulations! Great news. Keep up the good work.

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