FOFA reforms not enough: Global CFA Institute CEO
The lift in financial advice standards proposed by the Future of Financial Advice (FOFA) reforms is a step in the right direction, but it is not enough, according to Global Chartered Financial Analyst (CFA) Institute chief executive John Rogers.
On a fly-in visit to Australia, Rogers said he believed it was imperative that the financial advice industry adopted a relatively strong fiduciary duty to ensure advice was given in the best interests of clients.
Rogers applauded the approach taken by the Federal Government to drive change in business practice under its FOFA reforms, but said that being a true fiduciary was also only part of the solution.
Since the global financial crisis (GFC), Rogers believed “the industry must now learn to take a more systematic consideration of risks, provide more transparency around products and processes, and propose strategies more aligned to the realities of today’s environment”.
These challenges for the industry have been outlined in a CFA Institute paper on investment management following the GFC, which includes ten key considerations such as more frequent review of asset allocations and the alignment of the industry promise with actual delivery.
The CFA Institute has also worked in advisory capacity with the US Government on measures for improving the system in the best interests of investors, and is involved in the Australian market in a similar capacity.
“We believe the approach the CFA Institute has adopted globally will continue to find valuable relevance in regulatory issues around the quality of financial advice in Australia,” Rogers said.
There are 95,000 CFA charter holders around the world, including more than 1,300 in Australia who are obliged to adhere to the CFA Institute Code of Ethics and Standards of Professional Conduct.
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