Performance Perspectives Blog

50 Rules on Ethics

by | May 8, 2012

A journey of a thousand miles must begin with a single step.

At this year’s CFA Institute Annual Conference, John Rogers, CFA, President and CEO, called for all investment professionals to restore trust in the investment industry. He presented the CFA Institute’s “Integrity List,” a collection of 50 steps investment professionals can take to restore trust in our industry. And these steps are:

1. Make ethics training a high priority for yourself, your colleagues, and your firm.

2. Recommend to clients the simple products with transparent payoffs, costs, and risks.

3. Name and shame unethical behavior.

4. Operate with a 100% conflict-free business model.

5. Take credit for successes – and be transparent about failures.

6. Advocate for stronger regulations that protect investors.

7. Never overlook unethical behavior because you’re better served by ignorance.

8. Act with integrity 24/7 – not just at the office.

9. Commit to a gold standard code of ethics and professional conduct.

10. Vocally demand that your firm does what is right for clients.

11. Encourage young professionals to have the courage to disagree.

12. Keep client fees low.

13. Act with fairness and prudence with every decision.

14. Present analysis based on facts and client needs.

15. Always be honest with clients.

16. Never engage in misleading sales promotions.

17. Always under-promise and over-deliver.

18. Align incentives and disincentives in favor of clients.

19. Disclose how you improve your level of competence.

20. Outline exactly how you are managing a client’s funds.

21. Disseminate transparent, accurate, and timely information.

22. Be clear about situational influences in your environment.

23. Place the client’s interests before your own.

24. Base investment recommendations on strong analysis.

25. Actively disclose all compensation arrangements to clients.

26. Adhere to high standards even if they are not required in your country.

27. Disclose information in ways your parents would understand.

28. Adopt Global Investment Performance Standards.

29. Maintain regular contact with clients.

30. Always share bad news with all who are affected.

31. Listen to clients’ concerns and fears.

32. Help clients focus on risk as much as they do on performance.

33. Create an ethical work culture that allows constructive criticism.

34. Bring an ethical dimension to discussions of business strategy.

35. Adopt the CFA Institute Asset Manager Code of Conduct.

36. Remind junior associates that reputations are hard earned and easily lost.

37. Lead by example.

38. Take responsibility for the actions of your team.

39. Mentor future investment industry professionals.

40. Use social media to comment about the values you uphold.

41. Write articles and speak publicly about ethics.

42. Act as an expert resource for journalists.

43. Refuse to associate with any brokers who take advantage of clients.

44. Bring to justice those who take part in irresponsible and illegal activities.

45. Recommend companies with fair practices and good corporate governance.

46. Never get involved with risky investments.

47. Advocate for technology that makes the industry more transparent.

48. Serve on committees that advocate for regulatory reform.

49. Engage and build relationships with local regulators and policy makers.

50. Become a member of CFA Institute and sign the required annual ethics statement.

Impressive! I am glad I wasn’t asked to come up with 50 steps. While they may not all apply to you or your organization, many, no doubt, do. And so, consider which you can begin to work on.

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