With nearly 200,000 members and charterholders in 160 locations, CFA Institute has a unique perspective on the current state and future trajectory of the investment industry including geopolitics, AI and alternative asset classes.
At the recent CFA Society Australia Investment Leader Forum in Sydney, Qantas Super chief executive Michael Clancy – who is also the inaugural chair of the merged CFA Society Australia – moderated a session with CFA Institute president and chief executive Marg Franklin and institute chair Marshall Bailey, titled The industry through the eyes of CFA Institute.
Franklin said the current geopolitical environment will spark innovation, and force everyone to learn and practice resilience and equilibrium.
“When we talk to experts around the world, they universally say that geopolitics is an important consideration in the investment decision making process, and that’s only going to increase,” she said.
“I’d say almost everybody in this room has experienced unmitigated positive returns due to declining inflation, declining interest rates and GDP growth, as a result of globalisation, but we’re probably going to experience greater volatility now and that will spark innovation so I’m optimistic.”
On the topic of AI, Franklin said the “rhetoric was much more than the reality”.
This was due, in part, to two main hurdles.
Firstly, the regulatory landscape and uncertainty about the data that businesses can use, particularly if that data was originally obtained for different purposes; and secondly, inadequate systems and technology.
“The headlines [on AI] and the reality don’t quite match up but that can quickly change,” she said.
“It requires massive change management to have companies and teams actually embrace AI.”
Franklin also pointed out some potential unintended consequences of AI adoption – for example, losing the art of training and mentoring the next generation – citing the recent launch of OpenAI’s Deep Research service, which is an AI tool designed to act as a junior investment analyst.
OpenAI has said the service can carry out time-consuming research and create in-depth reports and effectively do, in ten minutes, what would typically take a human being “many hours”.
“You still need humans in the loop, which begs the question, how do you apprentice people? What gets compressed or taken away and how do you decide that?” Franklin said.
CFA Institute has created a range of papers, resources and tools to help members understand the potential benefits and risks of using AI in asset management, along with the ethical considerations. It is currently updating its AI handbook, which looks at AI from an organisational and operational perspective.
Franklin said she anticipated that a module on AI will soon be incorporated into the association’s flagship CFA program.
This follows a 2022 CFA Institute survey which found that the most in-demand type of talent across firms is finance professionals with AI and big data skills.
Institute chair Bailey said a key role of the board was to determine the optimal allocation of resources and money in order to meet the needs of members and the broader industry, citing AI as a significant opportunity for the institute to demonstrate leadership.
“The challenge is not only keeping up with our people but staying ahead of our people,” he said.
“We’re trying to figure out how to use [AI] for our own benefit as well as understanding how others might use it. This work will help organisations engage with us as well, but there are risks so we want to help guide members to think about how best to manage those risks.”
Bailey said the rapid onset of the Covid-19 pandemic exposed major risks for the Institute, such as its heavy reliance on income from the CFA program and an inability to facilitate online exams.
“Covid-19 clearly revealed the things putting the organisation at risk, if we didn’t change,” he said, along with issues such as inadequate attention on areas like private markets and wealth management.
As a result, CFA Institute closely examined its value and service proposition and implemented changes to continue serving its current and future members.
“We should be able to offer other high-quality education services. The CFA charter holding will continue to be the gold standard and our number one product, but we can do more than one thing.”
After Covid-19, CFA Institute established a learning design team to review the delivery of courses, based on the latest developments in human centred design. This has resulted in a more integrated, engaging and effective approach.
“Our ambition is to provide access to very high-quality learning that leads to better systems and better investor outcomes, and that can be done in a delightful, engaging way,” Franklin said.
“People don’t sit down and read an 80-page document anymore. We can take research and break it down into smaller pieces, and attach modules along the way, and integrate it so it’s more effective. We can change behaviours because the world is infinitely more complex than when our exams were first written. There are a lot more products and clients, there’s been a lot of innovation, and the composition of the industry has changed. All of our learning, not just the CFA program, needs to be designed so people can engage with it.”
Marshall said that the fast pace of change in investment management presented challenges, particularly for older people.
“It’s quite human to want things to stay as they are, especially if you like how they are, but it’s also human, particularly for young people, to want things to move on and progress,” he said.
“Our job is to continue being relevant to take the organisation and our members forward.”
