CFA: turf badly-behaved advisers

A CFA Society of Australia head says that advisers who get caught doing the wrong thing should be booted from the industry to promote better cultural standards in the financial advisory space.

One of the major issues identified in a recent financial services inquiry hearing was the firing of advisers from one company, only for them to be hired by another, with nobody ever knowing what happened, except the adviser and the company in question.

The sheer number of advisers being fired for poor advisory practices in just the last few years alone is high enough to warrant a closer inspection of precisely where these advisers have ended up, and whether they are still providing consumers with the type of advice they got fired for in the first place. At this point, it seems that nobody actually cares very much: precisely the problem.

Kate Misic, head of the CFA Society of Melbourne and head of alternative investments at Telstra Super, says that fund managers and institutional investors should not only stand by the CFA’s Statement of Investor Rights, but endorse the Asset Manager Code of Professional Conduct to improve standards across fund managers. So far 1,100 fund managers across the globe have signed the Code, but in Australia just four have agreed to the standards.

Employers – fund managers – are letting the industry down by continuing to allow bad advisers to keep circulating, but Misic says if employers had higher standards, more could be done to keep those who have low standards away from those with more scruples, because the cost, ultimately, is too high. Filtering employees should be carefully conducted, Misic says, and on top of that, she would like to see investment professionals being forced into continuing education in the same way that other highly-qualified professionals such as lawyers and doctors are.