R6 Professionalism

Question 1

R6

Trade Bodies vs Professionalism

Answer 1

These standards distinguish professions from the craft guilds and trade bodies that were established in many countries. In particular, the requirement for members of professions to uphold high ethical standards is one clear difference. Another difference is that trade bodies do not normally have a mission to serve society or to set and enforce professional conduct rules for practitioners.

Question 2

R6

How professions establish trust

Answer 2

1. Professions normalize practitioner behavior.
2. Professions provide a service to society.
3. Professions are client focused.
4. Professions have high entry standards.
5. Professions possess a body of expert knowledge.
6. Professions encourage and facilitate continuing education.
7. Professions monitor professional conduct.
8. Professions are collegial.
9. Professions are recognized overseeing bodies.
10. Professions encourage the engagement of members.

Question 3

R6

Trust in Investment Management

Answer 3

• The investment management profession meets most, but currently not all, of the expectations of a profession
• The investment management profession and investment firms must be interdependent to maintain trust. Employers and regulators have their own standards and practices that may differ from regulations and standards set by professional bodies. The investment management professional bodies typically direct professionals in how to resolve these differences.

Question 4

R6

CFA Institute as an Investment Management Professional Body

Answer 4

• The mission of CFA Institute is “to lead the investment profession globally, by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society
• The CFA Institute Global Body of Investment Knowledge (GBIK) and Candidate Body of Knowledge (CBOK) are updated on an ongoing basis through a process known as practice analysis
• Members of CFA Institute and CFA Program candidates are required to adhere to the Code and Standards and to sign annually a statement attesting to that continued adherence

Question 5

R6

Expectations of Investment Management Professionals

Answer 5

Characteristics and behavior expected of all professionals include honesty, integrity, altruism, continuous improvement, excellence, loyalty, and respect for colleagues, employers, and clients. Extremely high standards, but not perfection, are expected, including behavior in public. Professionals should, through their actions, uphold the reputation of their profession and be responsible, accountable, and reliable in their work. Professionals should reflect regularly about the cycle of self-improvement, starting with a self-assessment, identification of knowledge gaps, compiling a program of continuing professional development to fill those gaps, putting the new learning into practice, and then evaluating the results in order to inform the next cycle. Key duties of professionals are to provide independent advice, avoid or disclose conflicts of interest, and respect client information, objectivity, transparency, and confidentiality.

Question 6

R6

Challenges for Investment Management Professionals

Answer 6

• New trends are reshaping professions and expectations of professionals.
• Transparency has made it easier for consumers to compare the prices of services.
• Regulation has become increasingly commonplace across the world
• Globalization has driven more common practice around the world. Globalization could prove adverse for the investment management profession if large global firms, through consolidation, wish to establish their own standards and practices that conflict with the codes of individual professional bodies
• The greatest challenge for the investment management profession comes from technology. Digital systems may be able to replace or enhance many of the functions of an investment professional.