'Financial services and investment management industry will need to create value for communities'

The CFA Society India recently held its seventh edition of the wealth management conference in Mumbai. The event discussed at length the landscape of the wealth management, right investment strategy and risk of macroeconomic accidents.
Money9 spoke to Margaret Franklin, CFA, President and CEO CFA Institute over a variety of subjects.

Money9: In today’s changing times, how does a professionally recognized credential such as CFA make a difference in the investment management industry globally?
Margaret Franklin: Today’s investment professional is facing an extraordinary moment of immense change in the construct of our ecosystem, the broad investment landscape, and the overall societal context in which we’re currently working. The financial services and investment management industry will increasingly be called upon to deploy its considerable skills to create value for the communities in which we all live and work – and will also be held accountable for their success or failure to do so.

This is an exciting time for investment professionals to demonstrate their analytical skills to make an impact in the most tangible way, despite the challenges that they may face. When an individual earns the CFA designation, it showcases that they have a deep knowledge, skills, and ethical training to succeed in the profession, even in the most unexpected of times. By pursuing further education, an investment professional showcases that they are dedicated to not only the academic theory and history of this profession but also to staying abreast of current industry practice and real-world portfolio management skills.

The CFA charter is a designation of distinction that builds strength of character in the market and is recognized everywhere. Ethical behavior by all financial market participants can lead to broader participation in the markets, greater protection of clients’ interests, and more opportunities for investment professionals and their firms. Clients are attracted to firms with trustworthy reputations, leading to more business, higher revenues, and prosperity for all.  Members of CFA Institute are committed to the highest standards of ethical conduct in the investment profession – they attest to this annually and are recognized globally for putting their clients’ best interests first.

Money9: With the advance of Robo-advisory in the field of financial investments, how important is it to still have a human adviser compared to Robo-advisers?

Margaret Franklin: We see technologies like robo-advisors as more complementary than disruptive to the financial servicesindustry. We believe “people plus technology” is the best formula for success. While technology increases transparency and enables more customization, it can also enable better human advice and judgement. In fact, our recent Trust Study found that half of retail investors and more than four-fifths of institutional investors say that increased use of technology has increased trust in their advisor or asset manager, respectively. Individuals in India do however see the importance of in-person, human interaction. 63 percent of respondents to our recent survey noted that in-person interaction is necessary for them to trust an adviser, and 70 percent noted they are more likely to trust recommendations from a human adviser compared to only 2 percent who trust a robo-adviser.
Considering the use of technology and the benefits that it creates, it’s important that we as investment professionals embrace the advancement of these platforms and find ways to work in harmony with the evolving fintech landscape to realize greater outcomes on behalf of our clients and more efficient ways of working, without sacrificing the important trust and connection that human interactions foster.

Money9: According to you, during times of high market volatility, how can an investment management industry still keep the trust of investors intact?

Margaret Franklin: In times of uncertainty, it’s critical for the investment management industry to maintain the trust of investors, as we work to reinvigorate and rebuild economies. According to our biannual Trust Study, India has the highest trust level of any market globally. This trend has persisted since the 2020 edition of the survey. While this existing level of trust is a strong foundation, we must bear the responsibility to maintain it.
Continuing to provide our clients with transparent, individualized, and personal engagement is a cornerstone of what we do as investment professionals. We must continue to showcase and vocalize our commitments to values like integrity, candor, and putting investors first.
Our latest trust study showed us that building and maintaining trust is a multi-faceted process. While the act of fostering trust can be individual to each person and their relationship with their client, we identified “trust enhancers” to guide firms and professionals to earn greater trust, including: an effective use of technology to connect and enhance client interactions and provide transparency, understanding the interests and values of clients and creating an alignment on how this impacts how their funds are invested, and creating a strong connection to build a solid foundation and foster long-term trust.

Money9: What is your view on the Indian markets and opportunities available for the FIIs?

Margaret Franklin: India is an incredibly unique market. Unlike many other major markets in the world, the population is largely young, and therefore there is a true opportunity to redefine the future of financial markets – both from the perspective of professionals and investors – within this region.
Given the huge cohort in the gig economy in the region, having trusted financial professionals and a strong understanding of their individual financial pictures is imperative. This opens the door for investment managers to guide their clients in successfully approaching the markets through a long-term lens, given their existing track records are likely in their infancy.
We believe there is a huge opportunity to continue to invest in India and expand our footprint in the region. We will continue to identify unique ways to cater to the needs of investment professionals in India. Providing high-quality learning opportunities is just one example of this, expanding access to our programs is another.

Money9: What is your advice for professionals who want to enter the investment and wealth advisory industry today?

Margaret Franklin: First and foremost: I have found my career in the investment management industry to be a truly exciting and impactful way to make a difference in the world. Over the course of my career I’ve been constantly challenged and had wonderful opportunities to develop new skills. For anyone looking for a career like this, I encourage them to consider investment management.
For new career entrants, I recommend a commitment to curiosity and lifelong learning. In finance today, this is an absolute requirement as this industry continues to evolve at a rapid pace. Keep learning and say yes to new opportunities.
I also recommend pursuing a professional designation. Not only does this equip individuals with the technical knowledge our profession requires, it enables more ethically driven, strategic thinking, as well as an expanded network of like-minded individuals that provide immense value as it relates to career development, mentorship, and learning.