Ball tampering and the CFAs: why integrity is so important


by John Hamer*

Paul Smith, the global president and chief executive of the CFA Institute, says shining a light on a problem, as Australia’s Royal Commission into banking has done, is a good thing. Before you find a cure you need to find the illness, he says. Australian cricket’s ball-tampering’ scandal is a good analogy.

Smith was in Australia last week to present the keynote address to a CFA Institute lunch in Sydney. His topic was “professionalism, ethics and integrity in the wake of the Royal Commission”. He was followed by a panel discussion hosted by Anthony Serhan, a local CFA board member who recently resigned from his senior role at Morningstar to join fund manager Pendal Group.

Smith said he was nervous, as an Englishman, to draw on the ball-tampering analogy. Plus, of course, his surname is the same as that of Australia’s troubled captain, Steve Smith. But the cost of the ball-tampering incident spread across the whole cricketing world – not just Australia’s captain and vice captain (David Warner). Nevertheless, focusing on professionalism was what the CFAs were all about. More than 300 people were in attendance, not all of them cricket followers to be sure.

Smith stated that it was a global challenge and it was a good thing for the Royal Commission to be shining a spotlight on professionalism. “Many of us [in the industry]don’t believe we have a problem,” he said. “We need to stop complaining about the criticisms and turn them to our advantage. We need to be a lot louder and prouder of the purpose of our industry. We have done a poor job, so society doesn’t appreciate the role we play.”

Smith said: “We lack a purpose and trust. The answer to that is the way out of our dilemma. The Royal Commission is about rebuilding trust. Trust is ever-more important. What we haven’t built is an investment profession – we have built an industry. How do we migrate from product flogging to being service providers?”

As another analogy, Smith said that 100 per cent of doctors succeeded in their profession but only 50 per cent of financial services professionals could succeed due to inherent conflicts of interest.

“We need to do a lot more on credentials (such as qualifications) and professionalism. Australia has very low levels of trust versus overseas. The ‘Trust Equation’ is all about marrying technology with people. Credibility equals credentials and track record.”

Smith outlined in his presentation, eight steps to increase trust. “We need to put in then we can take out,” he said.

“Women will be the larger cohort of clients than males (over 50 per cent over the next decade). And younger people are much more purpose driven. What we need more than ever is greater diversity – how do we provide better outputs if we don’t improve inputs.

*John Hamer is the principal of events production company The Hamer Connection.