Canada is a strong testament to the power of a designation, says the president of the CFA Institute, the organization that administers the global Chartered Financial Analyst (CFA) designations, where a growing number of client-facing advisors are opting for the designation and the Canadian societies are taking a direct advocacy role in this country’s capital markets.
Canada has among the largest proportional amount of charterholders in the world. The CFA Institute has about 90,000 members, more than 11,000 of whom are based in Canada.
“Definitely, the CFA societies here in Canada are among our strongest, most organized and oldest societies. They serve as great models for countries where the population of charterholders is growing. We’ve taken the learning that has been developed here in Canada and applied it through a series of meetings where we bring society leaders from across borders,” John Rogers, CFA, president and CEO of the Virginia-based institute, told Advisor.ca.
Rogers pointed out that the institute’s vice-chair, Marg Franklin, is a Canadian-based member and former president of the Toronto CFA Society. Canada CFA societies have also taken a unique role in developing a national advocacy group, the Canadian Advocacy Council for Canadian CFA Institute Societies (CAC), which is actively working to create a more ethically based transparent markets structure in Canada.
CFA members want regulatory reform
In fact, the CAC released its findings from a survey of the national membership’s perspective on Canada’s regulatory structure on Thursday.
Overwhelmingly, the survey found that Canada’s charterholders want to see more significant regulatory reform in Canada.
Ninety-two percent of the more than 1,300 respondents expressed the view that Canada needs regulatory reform. Seventy-five percent support a single national regulator, of which 62% favour a federal system and 13% favour a single interprovincial regulator jointly overseen by provincial authorities.
Experience doesn’t breed complacency, but rather contempt. The survey showed that the support for adopting a single national security regulator system grows commensurately with respondents’ tenure in the current regulatory system.
“The goal of market regulation should be to enhance market credibility and ensure a level playing field for all market participants. By extension, a strong regulatory system goes a long way to maintaining investor confidence,” says Ross Hallett, CFA and chair of the CAC.
According to the CAC, the federal government’s proposal for the new national regulator is principles-based. Canadian CFA Institute members are of the view that a principles-based model is not sufficient, which does put them, potentially, at odds with some other advisor groups in Canada.
“Clearly, Canadian CFA Institute members feel that a principles-based model — which is what the federal government has proposed — isn’t sufficient,” Hallett says.
Seventy-three percent of respondents expressed a desire for a combined rules- and principles-based model. In this model, baseline rules or regulations would set a minimum standard for performance which, when coupled with principles, can be adapted to unique situations in a timelier manner than is the case with only rules. The CAC says this is particularly important given the speed with which new financial instruments are created or unique situations develop.
Canadian CFA Institute members are also concerned with investor protection. The vast majority (79%) of respondents say it is important to improve the way regulators police financial markets and the way the judicial system deals with fraud.
CFA opinions increasingly advisor opinions
What charterholders do increasingly matters to Canadian retail investors and advisors, because more and more advisors are opting to obtain the CFA designation, or those with the designation are making the move from institutions to manage money for individual clients.
In fact, over the last year, Rogers points out that the institute was actively helping its members reorient their career paths. Much of the growth in demand for the designation is in private client and high net worth investment management.
“There has definitely been a trend in that direction—a direction our members now describe themselves as being involved in private wealth management—that is a very significant change from a decade ago, where you would have seen more of our members employed as analysts and portfolio managers working with pension funds,” he says.
The CFA program has increased the amount of education it offers, so that a client-facing role in individual wealth management is a clear career-path option for those who obtain the designation.
“[Particularly] in North America, we’ve seen a higher number of our members report that they are in individual wealth management; more and more of them in North America are moving toward smaller organizations. For the past several years, we’ve worked to build and strengthen our curriculum and developed a broad global body of knowledge for private wealth management,” Rogers says.
(10/21/09)