THE VALUE OF THE INVESTMENT PROFESSION A REPORT ON STAKEHOLDERS’ VIEWS
INTRODUCTION
NATALIE WINTERFROST, CFA
CHAIRMAN, CFA SOCIETY OF THE UK
In recent months, CFA UK has canvassed stakeholders across the investment
sector for their views on the profession’s value and the factors that may inhibit
our ability to generate greater value. We spoke to investment managers, clients,
consultants, the regulator, policy-makers and other stakeholders. We are
grateful for their time and for the opinions they expressed that are summarised
in this report.
There is universal agreement about the
fundamental importance of investment, but views
vary about the value the profession delivers and
how that can be enhanced. Some of those we spoke to
put greater emphasis on the profession’s role in helping
clients to meet their needs. Others stress the role
investment plays in improving the efficiency of capital
allocation across the economy. All believe the investment
profession performs a vital social function in converting
individuals’ savings into investable capital, which is
applied to generate a return for the original savers.
All those we spoke to also identified challenges
that the profession should address if it is to
enhance the value it delivers and raise its standing.
Leaders within the profession are keen to raise
levels of transparency and to see the profession’s
role and actions explained more clearly.
A recent CFA UK member survey reveals that whereas
55% of respondents feel that clients hold the profession
in relatively high regard (scoring 7 or above out of
10), less than 20% of respondents reckon that the
profession is held in high regard by society more
broadly. We need to close the gap by taking more time
to communicate our value beyond our client base.
The value the profession delivers is hard to quantify.
Our investment actions take time to feed through
to returns. The impact of our stewardship is rarely
immediate. Our stakeholders, however, are confident
that capital allocation is enhanced by investment
managers competing to identify productive investment
opportunities and that client outcomes are improved
by competition to design and deliver products that can
best meet their needs. A common observation among
those we talked to is that if the investment profession did
not currently exist, it would have to be created – even
if its design might not then be exactly as it is today.
The investment profession touches all parts of society.
Our clients – direct and indirect – are numerous. We work
directly for many individuals, but support many more
through the services and products we provide to pension
schemes, insurance companies and charities. More than
half of the UK’s working age population has pension
savings
. More than three-quarters of UK households
have insurance products. And close to 2,500 UK charities
depend on the investment profession to generate the
income and build the capital that supports their wor.
The profession helps clients to identify their investment
needs, builds risk-diversified portfolios to meet those
needs and provides access to investment opportunities.
We use specialist skills and knowledge within this process
(and across associated activities such as trading, custody
and reporting) so that clients and society more broadly
benefit from economies of scale and the division of labour.
The capital entrusted to us finances economic
and social activity, contributing to job and wealth
creation. Investment professionals do not run the
companies in which they are invested, but they
help those companies to manage their capital
efficiently and they set the price of that capital.
This report on stakeholders’ perceptions of the investment
profession comments on how investment generates
value, then addresses factors that inhibit our ability to
deliver greater value, before commenting on the need for
professionalism and a supportive policy and regulatory
framework. The many conversations that have informed
this report were provided on an ‘off the record basis’ but
the unattributed quotes included in the report give a sense
of the constructive and insightful feedback we received.
The report will be used to encourage discussion within
our membership – and with our stakeholders – about
how we can address the challenges that have been
identified. We plan to publish additional reports that
consider these challenges in depth and make specific
recommendations for tackling them. We look forward to
this work and to continuing to explain and communicate
the importance and value of the investment profession.
THE VALUE OF THE INVESTMENT PROFESSION A REPORT ON STAKEHOLDERS’ VIEWS