New CFA charterholders hear about risk management

The CFA Society recently presented charters to its newest members, with the Society’s Head of Publications at the CFA Institute Rodney Sullivan, CFA, brought in specially to award the charters.

The mission and purpose of the Chartered Financial Analyst Society is to lead the investment industry globally when it comes to standards and ethics and the main way it attempts to spread the word is via education of industry professionals, such as at the recent charter night held at Deckers restaurant for new charter recipients.

The CFA’s Rodney Sullivan says that charterholders hold high standards and ethics and the qualification is taken incredibly seriously within the investment profession.

“Ethics takes up a considerable portion of the entire examination. It goes beyond the professional sign off level,” he states.

CFA charter holders are obliged to go out to the investment community and help educate others in order to raise the level of discourse among investment professionals, he adds.
Ethics and standards are, Sullivan says, ingrained into everything that a charterholder does.

“These standards must be upheld continuously. That is why the qualification is a charter as it can be taken away if the member is found not to be upholding these high standards. It’s not a certificate and it can be revoked,” he confirms.

Sullivan says the CFA programme is continually evolving to ensure that it remains current and relevant to the industry.

“One area that the programme is exploring at the moment is behavioural finance, which we see as an increasingly interesting subject matter,” he explains. “We also see securities and investment vehicles developing, especially in the derivatives market. These types of issues have been brought into the programme.”

One of the biggest issues that the industry faces right now, according to Sullivan, is risk management.

“It’s important for us to educate our membership on how to manage risk and that risk can be managed to ensure that the client meets their investment goals,” he says.

“Every client has their own risk tolerance as well as a set of goals – putting that together equals the establishment of a risk management profile, which in turns translates into an investment strategy.”

Sullivan says he gave a presentation back in 2007 in which he talked about investors “stubborn disregard for risk”, during which he pointed out his concerns on the disconnect between prices and fundamental valuations.

“This situation never ends well,” he confirms and refers to the “collective delusion” that many were under (the madness of crowds, as he puts it) in believing that high prices were justified at that period in time, when they were not.

Risk management is therefore at the core of a CFA professional’s education process.    


Rodney Sullivan and people who have attained Level 3 passes in CFA exams and will receive their charter upon fulfilling work experience requirements: L–r: Rodney Sullivan, Mark Kearney, Vimbai Gurure and Neville Hicks