Investment Professionals: How Socially Useful Are You?

Helena Morrissey

The CFA Institute European Investment Conference is a focused, interactive conference for Europe’s leading investment professionals. The 2017 CFA Institute European Investment Conference will bring portfolio managers, analysts, chief investment officers, and CEOs together in Berlin on 16–17 November.

Helena Morrissey, founder of the 30% Club, an initiative aimed at achieving 30% female representation on UK corporate boards, challenged the audience at Sixth Annual CFA Institute European Investment Conference in London to step up and make their voices heard in areas where many professionals may be considered to have either not paid close attention before — or simply felt it was not their place to comment.

In a discussion that complemented the Future of Finance initiative at CFA Institute, a long-term global effort to shape a trustworthy, forward-thinking financial industry that better serves society, Morrissey addressed the question of “How socially useful are investment professionals?” Her initial diagnosis is that the investment profession plays a crucial role in society; by their very nature, practitioners have a direct impact on people’s retirement security and their quality of life. Although the vast majority of investment professionals strive to serve their clients to the best of their abilities, there remains much room for improvement not only in the way that business is conducted, but also in the way that the profession engages with society as a whole — and seeks to educate individuals about what they actually do.

Morrissey would like to see the profession take deliberate strides to regain public trust and drew comparisons to the trust that we as individuals place in our doctor or our lawyer. She raised the prospect that, one day, the general public may perhaps hold their investment advisers in equally high regard. She was quick to suggest that one of the biggest challenges facing investment professionals today is that, in the absence of adequate information on the value wealth managers provide to society, let alone any clear differentiation from other financial services providers, many people have simply tarnished them with the same unfavorable brush as “the bankers.”

Responsibility for correcting this misinterpretation, Morrissey contended, lies squarely with wealth managers themselves.

Morrissey’s view is that because wealth managers earn their living by forming educated opinions and taking positions, they can no longer remain silent on socioeconomic issues affecting their clients’ lives. The days of operating “behind the scenes” are gone, she said, and our wider society now expects professionals to speak out on key issues. Citing her previous experience on the board of a financial industry body in the United Kingdom, she highlighted what she described as “an odd tendency” for normally decisive people to fall into the trap of decision by committee and the desire to be part of a consensus view. To counter this, Morrissey asserts that there is now plenty of room for wealth managers to hold differing views from financial services peers and that society may indeed welcome different perspectives — if only wealth managers can find a way of engaging with the public to express them. “How I think we can improve our social value is that we stop whining and more constructively engage,” she said.

Morrissey was also quick to acknowledge that a wealth management profession more engaged with issues that their clients hold dear is of course not just good for society but is also a business necessity. As with any industry, she reminded the audience, wealth management firms wishing to build a sustainable business model must first have a solid foundation of relevance and trust with their clients.

The right to be heard must be earned, and here Morrissey pulled no punches in urging her peers to recognize the profession’s historical ability to appear self-seeking — not least on such matters as fee transparency. Rather than taking a defensive stance (often by simply being ill-prepared to openly engage with clients), she called for the investment community to step out of the shadows, be willing to demonstrate their value, and to learn how to relate to and prove their relevance not only to their clients but to society at large.

Journeys of redemption begin with simple steps. Three steps that Morrissey recommends her peers take are as follows:

  1. Open the door (literally) and proactively engage with your clients.
  2. Acknowledge criticisms that come your way and look self-critically at things that need to change.
  3. Be prepared to speak out and contribute to issues specific to the profession and crucially, issues beyond your own sector that will contribute to the health of the economy and the nation as a whole.

Morrissey also highlighted the importance of actions and words being aligned, and she offered no illusion of perfection on her own part. Recognizing challenges she and her team at Newton face, she encourages wealth managers to continue to work to reconcile their approach to investing and the stance that their firms may or may not be willing to take on matters of interest to society. Her view is clear: Contradictions in this area will prove to be an impediment to the profession’s ability to recalibrate the public’s perception of how socially useful it is.

Addressing perhaps one of the most sensitive opportunities for wealth managers to show true grit, Morrissey laid down a challenge in the area of fees. Describing the profession as sitting ducks, ripe to bear the brunt of downward pressure on fees, she does not rally against those applying the pressure but instead calls on wealth managers to be proactive in demonstrating value to their clients through innovation and high standards of service. Clients can be more comfortable with paying fair fees than one might assume — if the service provided is fully understood and deemed to be of good value.

Innovative differentiation, such as launching funds that serve the interests of clients and society rather than merely following the latest populist trend, along with a willingness to embrace fee transparency, Morrissey suggests, will be crucial to the credibility of the profession and the degree to which society recognizes and appreciates the role it plays.

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