CFA sees Asian membership rocket, plans expansion
Asia is now well established as the growth engine globally for the CFA Institute, and that is reflected in the organisation’s plans for the region.
Nick Pollard, CFA’s Asia managing director, is looking to open an office in Shanghai this year – which will be the institute’s fourth in Asia – and to add four test centres, two in China and two in India. This comes a year after Pollard took over from Paul Smith, who became the CFA’s global chief executive.
“We need to make ourselves more accessible,” Pollard told AsianInvestor, referring to a new regional development strategy that the institute is about to announce.
CFA, a global education association for investment professionals, already has regional offices in Hong Kong, Beijing, and Mumbai.
Stellar member growth in Asia
He said nearly half (48%) of all candidates are now based in Asia, largely in China and India. Five years ago, the region would have accounted for half that proportion, noted Pollard.
“For CFA, the US is a mature market, so growth is flat, while the EMEA [Europe, the Middle East and Africa] region is growing, but not nearly as fast as Asia.”
Sustaining that growth and maintaining certification standards are both important, so the institute is conscious of the need to ensure supply matches demand.
India is a good example, Pollard said. The number of CFA charterholders there is growing quicker than the country’s investment management industry, he noted.
The association has been working not only with institutions involved in investment management, but also related businesses, such as business-process and knowledge-process outsourcing.
“[Those organisations] still need people with analyst-type skills, but they are not the core market, so we’ve had to be more flexible,” Pollard said.
The wealth management business in India is also starting to demand people with a deeper level of investment management skill, he added.
There are 140,000 CFA charterholders worldwide, but Pollard reckons that’s only 10% of the potential market of people for whom the qualification would be relevant.
With the appointment of Smith as president and CEO in 2015, the hire of Bjorn Forfang in August last year as managing director in charge of the organisation’s relationships with institutional investors, and Pollard’s move from private bank Coutts to head Asia, the institute has ramped up its activities as a proponent of ethical advice and respect for end-investor clients.
Female representation higher in Asia
As an example of the CFA's activism, the institute is campaigning for greater gender diversity in the investment management business.
Research carried out by Credit Suisse in association with the CFA Institute showed that companies with greater gender diversity in their decision-making process are more successful.
“Investors need to know that’s a question they should be asking, against a background of an industry where women are appallingly represented,” Pollard said.
“Worldwide, only 18% of people working in core roles in the asset management business are women. You have to ask why that is,” he noted.
In Hong Kong, 24% of CFA charterholders and 32% of its candidates are women. In China women account for more than 50% of candidates, he noted, and that’s the only country in the world where that is the case.
“So there’s definitely something different in Asia,” Pollard noted, in line with observations made by other senior investment professionals and comparative employment data.
ESG scrutiny
Environmental, social and governance (ESG) issues are also something the institute is highlighting as key. Pollard said people from outside the region don’t sense that ESG is important in Asia and he conceded that the region still has some catching up to do compared with the US and Europe.
Japan has a pretty poor record in terms of governance, but that is changing, he noted. “We had a full house when we presented in Japan on the subject of ESG, with regulators, government ministers, and company CEOs all wanting to know not only what’s going on in the world, but how they are perceived in that context.”
Organisations may resist change or may not welcome scrutiny of their activities – be it a sovereign investor that holds shares in landmine makers or an asset manager that buys tobacco stocks.
But as Pollard said, “these companies have customers, and as the CEO of Nokia said, it’s really not about proving the business case, it’s about understanding that it’s the right thing to do. That’s where ESG needs to get to in Asia.”
One obstacle to CFA making progress in its aims is what’s happening in the US, noted Pollard. The Donald Trump administration is moving to repeal regulation around fiduciary responsibility to the client and what he describes as “throwaway comments about climate warming, which are going to confuse the market”.