The Evidence-Based Investor

Putting investors first

Posted by Robin Powell on April 26, 2016

I’m no business guru, but having spent a few years now as a small-time entrepreneur, one thing I have learned is the importance of putting the customer first. Of course, most of us need to earn a living, and those who provide exceptional value deserve to be richly rewarded. But no business can expect to succeed by constantly putting its own interests ahead of those of its customers.

Except, that is, if that business happens to operate in the investing industry. We’ve somehow allowed a culture to develop, particular in fund management and in stockbroking, in which a “me-first” approach is somehow acceptable, almost expected, even desirable.

The Investment Association, for example, the body which represents UK asset managers, last year asked its member firms to sign a Statement of Principles, which included a pledge to put the interests of clients ahead of their own. Out of more than 200 members, just 25 agreed to do so. The Association’s Chief Executive, who had for some time been advocating a more client-centric approach, subsequently lost his job after several large fund houses threatened to leave. Now under new leadership, the Association appears to have quietly dropped his reform agenda altogether.

It was encouraging then to see that, for the third year in succession, the CFA Institute has recognised May as Putting Investors First month. It’s a global initiative focusing on “promoting the needs and rights of investors, with the end goal of uniting investment professionals in a commitment to place investor interests above all others”.

Throughout next month, many of the Institute’s 147 member societies worldwide will be hosting local events and sharing its Statement of Investor Rights, a list of ten rights that any investor should expect from financial service providers. There will also be a global advertising campaign called A Difference That Matters, to raise public awareness of what CFA charter means.

I’m a big fan of the CFA Institute and the work it does to raise ethical and  professional standards, and Putting Investors First is worthy of all our support. Wherever they are in the world, charter holders should check out what’s going on in their area and get involved. Ordinary investors too can play a part by reading and sharing Realize Your Rights, a new publication which explains how to evaluate the commitment of their own financial service providers to put their interests first.

We will only have a consumer-focused investing industry if those of us who believe in it take a stand and demand it. Leave it to others and it just won’t happen. Eventually, one would hope, financial professionals won’t need any reminding to put consumers first. That day, sadly, remains a long way off.

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Robin Powell

Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector. Regis Media.

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