Financial industry works to regain trust of investors

Gov. Bill Haslam has proclaimed May 2015 “Putting Investors First” Month as a way to recognize the important place that investing and the investment profession have in a vibrant, growing state economy. The governor’s declaration was done in partnership with the Chartered Financial Analysts (CFA) Societies of Tennessee, which are the local chapters of the CFA Institute, a nonprofit organization that represents investment and financial analyst professionals worldwide.

The financial industry is acutely aware that the financial crisis caused many investors to lose faith in their profession — and rightfully so, given the evictions, foreclosures, unemployment, market declines and ugly headlines that dominated our national life then. So investors should be encouraged that both the governor and a preeminent institution representing investment and financial professionals are shining a light on investing and the investor. After all, much of what you work so hard for — your home, your retirement, your plans for your children and your grandchildren — is predicated on the work of this industry and your decision to participate in it or not.

Investors have rights

The Statement of Investor Rights was developed by the CFA Institute to advise the buyers of financial service products — that’s the average investor like me and you — of the conduct they should expect from financial service providers. These rights reflect the fundamental ethical principles that are critical to achieving confidence and trust in any professional relationship. The list applies to financial products and services such as investment management, research and advice, personal banking, insurance and real estate. Whether you are establishing an investment plan, working with a broker, opening a bank account or buying a home, the Statement of Investor Rights is a tool to help you get the information you need, the service you deserve and the trust that is so vital to a building your financial future with the help of a professional.

Here they are. “When engaging the services of financial professionals and organizations, I have the right to:

1. Honest, competent and ethical conduct that complies with applicable law.
2. Independent and objective advice and assistance based on informed analysis, prudent judgment and diligent effort.
3. My financial interests taking precedence over those of the professional and the organization.
4. Fair treatment with respect to other clients.
5. Disclosure of any existing or potential conflicts of interest in providing products or services to me.
6. Understanding of my circumstances, so that any advice provided is suitable and based on my financial objectives and constraints.
7. Clear, accurate, complete and timely communications that use plain language and are presented in a format that conveys the information effectively.
8. An explanation of all fees and costs charged to me, and information showing these expenses to be fair and reasonable.
9. Confidentiality of my information.
10. Appropriate and complete records to support the work done on my behalf.”

Take it from me, both as an investor and a financial adviser who has earned the CFA charter, the absence of any of these tenets can mean big trouble for your financial future. So if these don’t accurately characterize your relationship with your financial professional, it’s time for a new relationship. Posthaste.

“Putting Investors First” Month kicks off a campaign by the CFA Society of Nashville to celebrate the independent member society’s 50 years in the city, culminating with the Future of Finance Celebration to be held in July. The theme of the celebration will be to highlight the importance of professionals and regulators working together to protect the interests of the individual investor. As part of the celebration, the society will be raising donations to support two important financial literacy organizations in Tennessee: Rock the Street, Wall Street and the Tennessee Financial Literacy Commission.

Rock The Street, Wall Street promotes careers in finance to high school girls. The Tennessee Financial Literacy Commission is a program of the Tennessee Treasury Department that aims to equip Tennesseans with the knowledge to make sound financial decisions. These two organizations are focused on raising the next generation to be educated and informed investors.

For more information about the CFA Society of Nashville, visit CFASociety.org/Nashville.