Traditionally, a good financial analyst with advanced education and ethics training would most likely be found managing the investments of a big insurance company, pension fund or mutual fund.
But times are changing, and many top finance professionals — designated by the letters CFA after their names, for Chartered Financial Analyst — are shifting their focus, too.
These days, rather than work behind the scenes for institutional investors, a growing number of CFA-designates are choosing to manage the assets of wealthy individuals.
About 30 percent of these analysts worldwide work with individuals, as the numbers of the super-rich have risen and their needs become more complex, according to the CFA Institute, based in Charlottesville, Va.
«That’s a relatively new phenomenon,» said Jeremy Whitish, a senior investment analyst with a CFA designation who works for CUNA Mutual Group and other clients in a CUNA subsidiary known as Members Capital Advisors.
«Especially in the last five years, many more CFA charter holders have gotten involved in the private wealth management business, dealing with high net-worth individuals as clients,» he said. «There’s just more individual-accumulated wealth, and people are needed to manage it.»
But Whitish said it’s more than the wealthy who need help with their investments. As leader of a local association for investment professionals known as the CFA Society of Madison, Whitish said he wants to help everyone learn more about good investing.
«I’m always trying to get across that we can boil this complex concept of investments and financial markets into simpler terms that people can understand,» he said. «There’s just so much technical jargon … (that it’s difficult to understand. It’s almost lost in translation. «
He described public outreach as a duty, after the 2008 global financial crisis — triggered in part by risky or poorly understood investment decisions made by powerful financial institutions — rocked public faith in the finance industry.
«We need to be a trusted entity,» he said about the investment profession. «We need to rebuild trust.»
With 195 members from many of the area’s biggest companies, the society promotes ethical standards and provides opportunities for continuing education and networking. It also can help play translator for the public.
«We want to be able to bridge that gap,» he said.
As the local chapter of the global CFA Institute, the society offers events, open to the public for a fee, including lunches and dinners with guest speakers.
The society’s biggest event of the year is Thursday, when members will partner with UW-Madison’s School of Business and the State of Wisconsin Investment Board to present the second annual Madison Investment Conference at the Fluno Center.
The conference theme is «Asset Allocation in an Uncertain World,» and it will feature talks by investors, pension fund professionals, academics and institutional consultants from around the country.
Q: Why are you so passionate about reaching people in the public?
A: The message is very important. The financial crisis created this divide between Wall Street and Main Street. You’ve heard that so many times.
Now, we’re in Madison, Wisconsin. I don’t consider myself Wall Street, but people hear that you’re an investment professional and they lump us all together.
Well, now we’re trying to get out to the public and pull back the curtains, if you will, and be transparent. We want to be that voice, ensuring, for anybody in the market, that the markets are fair, equitable and free from bias. That’s what we stand for and what we want to fight for.
Q: Ensuring that advisers put the interests of their clients ahead of their own — or at least don’t actively work against them — was supposed to be one of the lessons of the crisis. But is it possible to guarantee integrity, given the financial rewards available to market insiders?
A: The client does come first. There’s no ambiguity about that. Without the client, the money goes away, and investment managers are investing nothing.
Q: According to the CFA Institute, the CFA program is a self-study, graduate-level curriculum requiring candidates to learn and apply investment knowledge. How does it work?
A: You have to pass three exams and you must have four years of relevant work experience, making investment decisions and recommendations.
Q: What do you study in the program?
A: Every level of the exam includes ethics and professional standards. Beyond that, there are 10 topics: quantitative methods, economics, financial reporting and analysis, corporate finance, the four asset classes — which are stocks, bonds, derivatives and alternative investments, such as hedge funds — portfolio management and wealth planning.
Q: How long does it take to finish?
A: The average is roughly 250 hours of studying for each level. As to the credentialing, it’s about 25 percent of those who sign up for Level 1 make it all the way through (to Level 3 and have the required work experience to earn it.
Q: What are some key points for anyone to consider about investing?
A: Getting invested is the first key, because the time value of money is so large and valuable. If someone starts contributing to their 401(k at age 25 vs. age 40, it makes a huge difference. The impact of compounding and the growth of money is very important.
And be diversified — don’t take single bets. It’s about hitting singles (consistently instead of trying to get grand slams.
Q: How do financial analysts do their jobs?
A: We follow the market. You want to know everything you can about a security or an investment before you make a decision, and then it’s deciphering what data you gather is most relevant. Two people can look at the same information and come to two different outcomes. And they could both be rational decisions, and only time will tell who’s right.
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