The message from John Rogers, President and CEO of CFA institute, was clear: there is no quick fix to the global financial crisis that started in 2007. Speaking to the Economic Club in Toronto on September 27, Rogers shared findings from the 2011 CFA Institute’s Global Market Sentiment Survey, including the fact that members expect it will take another three to five years to see market confidence restored.

Nevertheless, Rogers stated that the investment industry now has an unprecedented opportunity to make changes in its business models and practices to regain trust from investors and the public. Astute companies are stepping up their efforts towards increasing transparency and continuing to strengthen their internal controls. For its part, CFA Institute announced the establishment of the Systemic Risk Council in June 2012 to conduct a thorough review of the financial regulatory and oversight framework related to the prevention of systemic risk. CFA Institute has also compiled a list of 50 steps for practitioners to restore trust in the investment industry, with the first being a commitment to a gold standard code of ethics and professional conduct.

Social Impact from the Financial Crisis

The impact from the global financial crisis was deep and broad, said Rogers, noting that it has been damaging the global economy and consumer and business confidence and has affected the livelihood of many individuals. By taking defensive stances in many decisions, investors did not take a long-term view in allocating their capital into projects and investments. The lowered investment returns and ineffective capital allocations resulted in savings gaps because individuals have resorted to various actions, including delaying their retirements. This, said Rogers, could lead to a lower quality of life and heightened intergenerational stress.

CFA Institute members expect it will take another three to five years to see market confidence restored.

It is essential for the economy that there be a strong financial industry, he asserted. The strength of the financial industry is built on a strong level of trust from the public and Rogers outlined the three pillars on which to rebuild public trust: education, strong ethics, and enforcement.

TALKING ABOUT RISK

He also spoke of the need for fiduciaries to spend as much time talking about risks with their clients as they do about returns. To that end, the CFA education program has adopted strong standards, and the body of knowledge is regularly reviewed by global practitioners. Part of the CFA charterholder requirement includes close to 10,000 hours of industry involvement (a minimum of four years of qualifying work experience and examination preparation time). The highest ethics standards have been communicated through the Code of Conduct document and adopted by CFA members.

Canada has one of the highest CFA penetration rates per capita.

Finally, Rogers emphasized the need for increased resource allocation to enforcement by regulators and highlighted the importance of regulatory control reviews, including the joint efforts of both the buy and sell sides of the investment industry. He also noted that the financial industry should seek a balance between innovation and risk.

Rogers also pointed out that Canada was one of the best-performing markets during the recent global financial crisis, which is likely built on the fact that this country has one of the highest CFA penetration rates per capita. Currently, Canada’s 12 member societies represent the third-largest member base, just behind the U.S. and China. Out of the more than 110,000 CFA Institute members in the world, Canada accounts for 13,246 of them.