Aptitude and attitude

by Isabella Lee

Samuel Yang, associate director of investments
Merrill Lynch (Asia Pacific) Limited
Photo: Johnson Poon

Professional designation stresses ethical conduct along with performance

Because of its nature, the financial world can present professionals working within the industry with considerable temptation to put their personal and financial interests ahead of those of clients.

"The emphasis of CFA Institute on ethics is an attempt to address those temptations by constantly reminding candidates, CFA charterholders and CFA Institute members that the investor comes first and that the only viable long-term investment strategy is one that serves investors well," says Samuel Yang, associate director of investments, Merrill Lynch (Asia Pacific) Limited.

The CFA programme places particular emphasis on two factors: the professionalism of people working within the investment industry and the fair treatment of investors. It therefore aims to produce investment professionals who are both educationally proficient and highly ethical.

Being a CFA charterholder is the best way to enhance one's professionalism in the field, according to Mr Yang. "The fact that CFA charterholders have passed their exams indicates that they have mastered a pretty broad set of investment knowledge and that they are committed to ethical conduct and high standards within the profession," he explains.

Professional standards

The CFA curriculum emphasises principles common to all financial markets, with candidates developing a working knowledge of those principles in a global investment context. To identify the relevant principles, the CFA Institute conducts periodic extensive surveys among practicing CFA charterholders worldwide. These surveys form the basis for the CFA Candidate Body of Knowledge, which currently spans 10 general topic areas broadly categorised into ethical and professional standards, investment tools, asset valuation and portfolio management. These topic areas pretty much span the full spectrum of investment decision making skills.

In addition to completing the curriculum and examination programme, candidates must also have substantial relevant work experience in order to become CFA charterholders. CFA Institute also offers regular continuing education and professional development opportunities via global and regional conferences, web casts and print publications.

Ethical principles

While CFA charterholders have extensive investment knowledge and skills, they must also adhere to a rigorous code of ethics and professional conduct, which has been in place for more than 40 years. Ethical and professional conduct in the investor's best interest is at the core of the values of CFA Institute and is imbedded in the CFA curriculum. About 15 per cent of the CFA examinations cover ethics and professional conduct.

The CFA Institute Code of Ethics and Standards of Professional Conduct states that its members must "act with integrity, competence, dignity and in an ethical manner when dealing with the public, clients, employers, employees and fellow members". They are also encouraged to practice in a "professional and ethical manner" bringing credit to members and their profession, to strive to maintain and improve their competence and the competence of others in the profession, and to "use reasonable care and exercise independent professional judgment".

Mr Yang stresses, "CFA Institute has a robust system in enforcing these standards and has a professional conduct division within the institute. If there is an allegation that a member, charterholder or candidate has violated its codes of ethics and conduct, a clear process will be followed to conduct an investigation."

If an investigation concludes that a violation had taken place, CFA Institute has recourse to a range of possible disciplinary actions, depending on the severity of the violation.

Potential disciplinary steps include the issuing of a private, cautionary letter, the publication of a private censure describing the violation anonymously in the institute's CFA Magazine, the publication of a public censure, describing the violation and naming the individual involved, and the suspension of the member. Charterholders found guilty of violations may find their right to the CFA charter suspended for a period of time while a CFA candidate might be prohibited from further participation in the CFA programme. Memberships can also be revoked permanently.

"The Code and Standards also inspired the CFA Institute asset manager code of professional conduct, which provides guidance not only for individuals, but also for firms," Mr Yang notes. "Establishing a code of ethics is not just the right thing to do, it is also the best way to do business, because, if history has taught us anything, it is that good ethics is good business," he stresses.

"As CFA charterholders, we should all know that much is given and much is expected. We have earned a precious thing, so let's do nothing in our lives or careers to tarnish our reputation. The blemish, once there, will never really be removed. We should also do everything we can to maximise our investment knowledge. The CFA programme is just the beginning, and CFA Institute offers a wealth of continuing education options," Mr Yang adds.

Note: The views expressed by Mr Samuel Yang are his personal views and do not represent the views of Merrill Lynch.


Taken from Career Times 14 September 2007
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