Training the Trainers: Tools , Trends and Tips

1. Training the Trainers: Tools, Trends and Tips R. Charles Tschampion, CFA Director, Special Projects CFA Institute ASEC Spring Partners Meeting Washington, DC April 9, 2014

2. Europe, Middle East, Africa Global Membership & Candidate registration Americas Members: 77,004 CFA Program Registrations: 73,956 Societies: 86 Members: 23,809 CFA Program Registrations: 45,328 Societies: 39 Asia Pacific Total Members: 19,964 CFA Program Registrations: 92,373 Societies: 17 + CFA China Members: 120,782 FY14 CFA Program Registrations: 211,675 142 Societies in 67 Countries

3. MISSION To lead the investment profession globally by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society. STRATEGY Broader Mission + Bolder Voice + Bigger Community FRAMEWORK The Future of Finance Starts With You To shape a trustworthy, forward-thinking financial industry that better serves society

4. Six primary themes

5. What do the Trainees think of the trainers • Helpful to Understand What Potential Clients/Customers/Constituents Think About Financial Service Industry & Individual Professionals • Three Recent Surveys Sponsored or Conducted by CFA Institute: • Edelman Trust Survey • Economist Intelligence Unit – “A Crisis of Culture” • CFA Institute Global Market Sentiment Survey

6. Investor Trust Survey TRUST IN THE INVESTMENT COMMUNITY IS ON THE BRINK... • 2,100 retail and institutional investors  globally • Aligned interests valued highly • 73% agree they have fair opportunity to profit by investing in capital markets • Only 52% of investors trust the financial services industry • Largest response @ 35% cite "trusted to act in my best interest" as most important attribute in hiring an investment manager (above performance @ 17%)

7. Trust Attributes The top attributes that build trust in an investment manager are behavior related and relate to integrity – not performance • Transparent and open business practices • Responsible actions to address an issue or crisis • Ethical business practices / complies with voluntary code of ethics Learning: • Doing what’s right matters • Be transparent, open business practice • Demonstrate integrity and focus on ethics • Communicate early and often: Ambiguity is the enemy of trust

8. The Economist Intelligence Unit Statistical Highlights: 380 Financial Service Execs Globally Ethics • 91% of survey respondents placed equal importance on ethical behavior and financial success. • 67% of firms have raised awareness of the importance of ethical conduct by all employees • 53% of financial services executives say strictly adhering to ethical standards inhibits career progression at their firm Financial Knowledge • 62% of financial executives don’t know what is going on outside their department • 60% of financial executives highlight gaps in employees’ knowledge as a significant risk for their firm • 59% of financial executives agree improving knowledge of the industry as a whole would help make their firm more resilient • 12% say they are confident in their knowledge of the global regulatory environment

9. Cfa institute global market sentiment survey 2014

10. 2014 GMSS RESPONDENT PROFILE TOP MARKETS # OF RESPONDENTS 59% AMER 24% EMEA 17% APAC

11. WHICH OF THE FOLLOWING FIRM LEVEL ACTIONS IS MOST NEEDED IN THE COMING YEAR TO HELP IMPROVE INVESTOR TRUST AND CONFIDENCE? “No opinion” option excluded from results. Source: Global Market Sentiment Survey 2014

12. The costs of failure of trust Investors who do not trust the industry are unlikely to: • Save and invest for their future • Achieve their long-term financial objectives A “savings gaps” means: • Longer working lives • Lower quality of life • Intergenerational stress Social impact

13. Resources/programs where cfa institute can help the helpers in the savings/investment arena • Education • Thought leadership pieces such as “Essentials of a Secure Retirement” • Ethics & Standards • Asset Manager Code • Statement of Investor Rights • Professional Excellence • Publications – Financial Analyst Journal, CFA Digest • CFA Institute & Future of Finance Websites

14. Essentials of A More Secure Retirement • Developed by our global community • Spells out best practices for individuals • 4 Components: • Get started • Keep it going • Invest wisely • Retire well

15. Ethics and Standards CFA Institute members and CFA Program candidates, are required to follow the Code and Standards. • The Code of Ethics maintains that you must: • Place the integrity of the profession and the interests of clients above your own interests • Act with integrity, competence, and respect • Maintain and develop your professional competence • The Standards of Professional Conduct cover: • Professionalism and integrity of the capital markets • Duties to clients and employers • Investment analysis and recommendations • Conflicts of interest and responsibilities

16. Asset manager code Global standard and best practice code of conduct for firms AMC states that managers have these responsibilities to their clients • To act in a professional and ethical manner at all times • To act for the benefit of clients • 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 • Credibility and reputation building for Asset Management Firms • Demonstrates commitment to ethics and professional conduct

17. Statement of investor rights Demanding that financial professionals abide by these rights helps you build trust in the person and/or firm you engage with, and thereby collectively restore trust, respect, and integrity in finance. WHEN ENGAGING THE SERVICES OF FINANCIAL PROFESSIONALS AND ORGANIZATIONS, I HAVE THE RIGHT TO… 1. Honest, competent, and ethical conduct that complies with applicable law; 2. Independent and objective advice and assistance based on informed analysis, prudent judgment, and diligent effort; 3. My financial interests taking precedence over those of the professional and the organization; 4. Fair treatment with respect to other clients; 5. Disclosure of any existing or potential conflicts of interest in providing products or services to me; 6. Understanding of my circumstances, so that any advice provided is suitable and based on my financial objectives and constraints; 7. Clear, accurate, complete and timely communications that use plain language and are presented in a format that conveys the information effectively; 8. An explanation of all fees and costs charged to me, and information showing these expenses to be fair and reasonable; 9. Confidentiality of my information; 10. Appropriate and complete records to support the work done on my behalf. Also available in: Arabic Chinese French German Italian Japanese Korean Portuguese Spanish Thai

18. What can I do to build trust with the savers/investors I want to help?Here are some thoughts & resources that may help

19. Building credibility + displaying integrity = Trust from clients/customers Requirements : • Appropriate education & skill • Ethical Foundation • Focus on putting client’s interest first • Communicating appropriately (incl. Fees) • Rapport Behaviors: • Do what is right • Be transparent, open business practice • Demonstrate integrity and focus on ethics • Act in client’s best interest • Communicate early and often: Ambiguity is the enemy of trust

20. The CFA Institute integrity List Acollection of 50 tangible steps that investment professionals can take to restore trust in the investment industry. The list was inspired by “real-world” ideas from CFA charter holders and members. Some samples: • Require training on ethical decision-making for yourself and your firm. • Place the client’s interests before your own. • Name and shame unethical behaviour. • Recommend products with transparent payoffs, costs, and risks. • Help clients focus on risk as much as they do on performance. • For complete CFA Institute Integrity List online, visit: www.cfainstitute.org/learning/future/getinvolved/Pages/integrity_list.aspx

21. Visit the Future of finance WEBSITE • CFAInstitute.org/FutureFinance • Centerpiece of a global, integrated marketing campaign with tagline, “It Starts With You.” • Focus on depth of content on Future of Finance themes, with continual updates • Repository for Project deliverables • Designed to drive engagement and sharing • Includes a newsfeed organized by topic area: • Putting Investors First • Financial Knowledge • Transparency & Fairness • Retirement Security • Regulation & Enforcement • Safeguarding the System

22. For additional resources go towww.cfainstitute.org Website has significant content accessible to non-members