Regulation 

Importance of ethical leadership in investment sector increasing

Importance of ethical leadership in investment sector increasing

Finance depends on trust. The investment profession is no different.

We ask people to invest in uncertain outcomes over long periods of time.

They trust us to do our best as we work in their interests.

Ethical leadership – making sure that organisations’ culture and processes help people to make the right decisions on clients’ behalf – plays a key role in maintaining the integrity of the investment profession and building trust. 

It is not an easy task. Investment professionals work in a complex environment of multiple interests and stakeholders. Often these interests align, but sometimes they do not, and investment professionals regularly face ethical challenges of varying degrees. 

Our 2018 Ethics Survey revealed particular concern from those working in the industry around professionalism; ranging from knowledge of the law to independence and objectivity, misrepresentation and misconduct, with 39 per cent of respondents finding this challenging in the previous 12 months.

It also showed that a gap remains between the regard in which the investment profession is held by its clients, and how it is perceived by society more generally. We are, however, making progress and leadership will be vital if we are to maintain this positive momentum. 

Raising awareness

To help the profession enhance its ethical awareness and skills, CFA UK has been partnering with Duke Corporate Education on a unique ethical leadership programme.

The programme – which has now run for three years and worked with 40 individuals from leading firms across the sector – is designed for current and future leaders of the profession, who make the daily business decisions that impact clients.

Our participants work for firms that value high ethical and professional standards and that have strong processes and systems in place to prevent poor behaviour.

But these same firms know that poor ethical outcomes are not usually the result of a single actor or a single decision.

Key Points

  • Ethical leadership plays a key role in maintaining the integrity of the investment profession
  • It is about having an internal moral or ethical compass ticking along inside you at work
  • Firms’ ethical and professional culture is playing an increasingly important role in influencing where people choose to work

When things go wrong, they do so through a series of events – often accidental and initially thought to be inconsequential – that combine to create poor client outcomes and reputational damage.

Our partner firms understand the importance of building a culture that values ethical awareness and that prizes ethical decision-making centred on the client.

The programme uses experiential learning to explore professionalism, culture and conduct, equipping leaders with the skills, techniques and experience to deal with ethical issues themselves and, crucially, enabling them to guide others in their organisations. It is creating an alumni network of ethically skilled and aware leaders across the investment sector, who can sustain and develop the profession into the future.

Ethical dilemmas can be frequent 

As we celebrate the graduation of our 2018 programme participants this month, we asked industry leaders who have either participated in the programme or sponsored people to take part for their views about the programme.

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