More Australian asset managers should commit to global standards that outline the ethical and professional responsibilities of firms that manage assets on behalf of clients.
In the wake of high-profile investment scandals during the global financial crisis (GFC), the need for asset managers to demonstrate an unwavering commitment to high standards of ethical and professional conduct is paramount.
The Asset Manager Code of Professional Conduct (“the code”) was developed by the CFA Institute to enable organisations to commit to the same high standards required of individual CFA Charterholders.
“The initiative aims to encourage asset managers to commit to fairness and integrity in their dealing with investors and the broader financial community,” said Anthony Serhan, Managing Director, Research Strategy, Asia-Pacific at Morningstar and Vice President of CFA Society of Sydney.
“In Australia, as part of Investor First Week, we are encouraging Australian firms to commit to higher ethical standards in client relationships by signing up to the code,” said Mr Serhan.
Investor First Week is part of CFA Institute’s global Future of Finance initiative, a long-term effort to create a stronger ethical culture in the financial services industry. As part of the initiative, the Asset Manager Code of Professional Conduct requires managers to commit to the following professional standards:
- To act for the benefit of clients
- To act in a professional and ethical manner at all times
- To act with independence and objectivity
- To act with skill, competence and diligence
- To communicate with clients in a timely and accurate manner
- To uphold the rules governing capital markets.
“Currently more than 950 asset management firms, investment firms, private banks and hedge funds in more than 30 countries have adopted the code. We are calling on more Australian asset managers to follow the lead of their global peers and raise the bar of conduct here,” he said.
Mr Serhan said the leaders of asset managers need to set examples of ethical conduct, which will then filter down through the business. “Importantly, ethical behaviour begins at the highest level of investment management organisations and requires a consistent, company-wide approach to keeping investor protection and the professional conduct of managers as top priorities.
“If leaders within an organisation can demonstrate a real commitment to ethics, managers and employees will follow that example. The starting point is a strong code of ethics that encompasses fundamental ethical principles.
“Trust is the most important factor for investors when hiring an asset manager, more important than the ability to achieve higher returns. This first line of this code calls for managers to place client interests before their own, which seems like a great place to start if you want trust,” Mr Serhan said.
Click the following link to view the CFA Institute’s study: cfa_institute_edelman_investor_trust_study
