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Show 66 – The Investment Professional of the Future

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Produced in partnership with CFA Society United Kingdom and recorded at their Professionalism Conference, this is another packed episode featuring some great interviews:

Pt.1 – Dame Helena Morrissey, Head of Personal Investing at Legal & General Investment Management on Trust and Diversity – jump to Helena’s interview notes
Pt.2 – Jeremy White, Executive Editor of Wired, on AI, Blockchain and Facebook – jump to Jeremy’s interview notes
Pt.3 – Ben Page, Chief Executive of Ipsos MORI on ‘Trust and the State of Britain in 2018’ – jump to Ben’s interview notes
Pt.4 – Gary Baker, CFA Institute’s Managing Director EMEA and Gerry Fowler, Chairman, CFA Society of the UK discuss expectations of a Professional, Ethics and Value – jump to Gary and Gerry’s interview notes
Pt.5 – Patrick Hudson, Professor Emeritus in The Human Factor in Safety at Delft University of Technology, on ‘How High-Hazard Industries Manage Safety’ – jump to Patrick’s interview notes
Pt.6 – James Parsons, Leadership coach at Untapped Talent on ‘The Hidden Drivers of Ethical Behaviour’ – jump to James’ interview notes


Dame Helena Morrissey

Our first guest was Dame Helena Morrissey, Head of Personal Investing at Legal & General Investment Management and the Chair of the Diversity Project.

Photo of Dame Helena Morrissey and Russell Goldsmith

Chatting with Dame Helena Morrissey

Helena was named one of Fortune Magazine’s World’s 50 Greatest Leaders and the Financial Times’ 2017 ‘Person of the Year’. She was appointed a Dame in the Queen’s 2017 Birthday Honours list and her first book, A good time to be a girl: Don’t lean in, change the system, was published just a few months ago.

Helena’s keynote address was titled ‘The language of truth – fake news and the opportunity for honesty’, which related to the issue of building trust within the Financial Services industry.

Interestingly, the CFA UK’s April 2016 ‘The Value of The Investment Profession’ report stated that in their own member survey, less than 20% of respondents thought that the profession is held in high regard by broad society.  This was backed up by the 2018 Edelman Trust Barometer, where, when comparing the level of trust of businesses globally across different industries “to do what is right”, the Financial Services industry came out as the least trusted.

Helena said that the industry has been trying to address this issue since the financial crisis [of 2007-2008] but without affect to date.  She believes the issue needs to be looked at through a new lens and whilst there have been initiatives put in place to talk about ethics and why investment professionals should be trusted, people want to see that they do what they say.  She said that they need to be participating in the big economic and policy debates as this sets the context for investment to help educate on what fund managers do.

On the topic of Diversity, that same CFA UK April 2016 report stated that women represented at that time just 20% of CFA UK members and just over one-third of all new candidates for the CFA Programme in the UK.  Helena therefore said that all areas of diversity, be that Socio-economic, gender, ethnicity and sexual orientation, etc., are important as part of the process of building trust because people in the industry don’t look like those who they serve, and that young people want to join companies where existing talent look like themselves and where they have an inclusive culture.  However, Helena said that one thing she learned from leading the 30% Club is that it’s about revolutionising every aspect of the hiring and management of developing talent and making sure they are not sticking to past practices,  She added that the Diversity Project now has 50 members and they are starting to get some momentum.

Helena also made the point though that the financial sector was at the bottom of the recently published Gender Pay Gap data, in terms of the biggest pay gaps, and that there are still very few women in senior roles, ethnic minority fund managers and very few disabled people working in the industry.  However, she added that there is a lot of effort be put into thinking of new ways of working, for example, looking to implement agile working.

Jeremy White, Executive Editor, Wired

Interview starts at 6:40

Jeremy White, Executive Editor of Wired, provided the closing keynote at the conference on how AI and Machine Learning is being used to give businesses competitive advantage and how professionals can use the technology.

Russell Goldsmith and Jeremy White

Chatting with Jeremy White (right)

He described AI as a workhorse, being able to crunch huge amounts of data for the professionals, freeing up their time to enable them to work smarter.  He used the legal profession as an example, where AI is used to read through long legal documents to spot inconsistencies.

Jeremy’s talk also highlighted the importance of Blockchain, and he gave the example of TUI moving their entire hotel inventory onto Blockchain, saving millions [of pounds] and enabling them to show, in real time, what rooms are available and at what prices, overcoming the issues of selling the same hotel rooms at different prices in different jurisdictions.

We also talked to Jeremy about the current situation with Facebook, following an opinion piece that was published on Wired by their Senior Editor, Rowland Manthorpe, which was a pretty damning piece about how Facebook uses data.

Jeremy said that what was most interesting about the article was where it talked about the fact that even if you are not on Facebook,  they are still able to construct a ‘grey’ profile of you, garnered by what you have done on pages where there are Facebook ‘Like’ buttons, for example. Jeremy pointed out that he probably only logs in to Facebook once every two years and in fact Rowland, who wrote the article, had stated within it that he doesn’t use Facebook at all.

Jeremy added that the US team in Wired looked at the history of Facebook and catalogued just how many times Mark Zuckerberg has apologised to users for breach of data or trust, which he suggested meant that a lesson is not being learned, where they will go in a direction until they get enough push back and only then will they move the goalposts. However, he doesn’t feel there will be a huge financial impact to Facebook.  He thinks the apathy of the general public shouldn’t be underestimated, because if they like the service enough, he said you really have to greatly offend them for them to stop using it.   Wired UK’s own Facebook page has 115,000 likes and the US Wired Facebook page has over 2.8m people who have liked it.

Ben Page, Chief Executive, Ipsos MORI

Interview starts at 18:36

Ben Page, Chief Executive of Ipsos MORI presented on the subject of ‘Trust and the State of Britain in 2018’.

Ben Page and Russell Goldsmith

Chatting with Ben Page (left)

Ben said that there is a lot of uncertainty around and by looking at the media, we can see the country divided and fragmented over Brexit, divided by age and split between London and the rest of the country.

However, rather than look at the problems, Ben was keen to focus on the many things in the UK that unite us, such as the NHS, the monarchy, and our values including attitudes to homosexuality and gay marriage.  He believes that Britain is more at peace with itself and more liberal than some of the daily news headlines may have us think.

Ipsos MORI have been tracking trust levels since 1983 through their ‘Trust in Professions’ report.  Ben said there has been no change in whether people trust politicians to tell the truth and that all the communications around Brexit have made no difference to that at all, adding that we’ve never trusted politicians.  He cited a UK survey from August 1944 by George Gallup, as the Allies fought the Nazis in Northern France.  When Gallup polled the UK population if the politicians were acting in the country’s interest, in their own interests or in their party’s interest, even then, only 35% of people thought the politicians were acting in the interest of the county.

As for the financial services industry, Ben said it’s singled out by experts on a regular basis as the industry with a reputation problem with some of the biggest challenges, and it does have a lower level of trust than other industries, such as retailers.  However, it can be improved, and Ben advised that one of the drivers of key trust in business is having a real purpose, as well as being open & transparent and engaging.  He recommended companies show what they do for the country, where they invest and why they have made the decisions they have, as well as having a visible leader and reciprocity, i.e. giving something back, all of which will help them.

Gary Baker, CFA Institute’s Managing Director EMEA and Gerry Fowler, Chairman, CFA Society

Interview starts at 24:15

Next to join the show were the CFA Institute’s Managing Director for EMEA, Gary Baker and the Chairman of the CFA Society of the UK, Gerry Fowler.

Gerry Fowler, Gary Baker and Russell Goldsmith

Chatting with Gerry Fowler (left) and Gary Baker (middle)

Gerry explained that CFA UK’s mission is to build a better investment profession, which centres around three things:

  • Lifelong learning
  • Connecting professionals in a professional network
  • Advancing Professionalism

He added that this all points to what it means to be ethical as an individual and to be professional as part of a professional body, which means putting investor and client’s and society’s interests first.

The CFA Institute represents more than 150,000 members, made up of 151 local member societies across a similar number of countries. Commenting on a quote from Paul Smith, the CFA Institutes’ President and CEO, made in the CFA UK’s April 2016 report where he said that “the biggest disparities between what an investor expects and what they receive relate to fees and performance”, Gary said that this relates to what firstly what is promised and whether that is explicit or implicit, and then what is actually delivered.  He felt that the industry rightly gets a lot of criticism on that front end of marketing and that the transparency of performance, jargon and fees has a lot of questions.  However, delivery has been a lot better over the last ten years, post financial crisis, but they haven’t re-established trust and he feels that this is still because of how they are presenting themselves to many investors, which needs to be addressed as an industry.

Gerry said that the CFA Charter has become the gold standard for global investment professionals because the globalisation of capital means that there is a homogenisation of professionalism and standards around the world, which, as well as because of social conscious, is part of the reason why we are talking about Environmental, Social and Governance (ESG) standards so much.  He felt it’s because there is much more diversity in ESG standards across a more integrated global capital framework.

Gerry added that there is a lot of discussion around the model of capitalism and whether firms should be required to satisfy the needs of their shareholders.  He said that for example, in banks, the equity shareholders are a very small component of the capital structure and that maybe bond holders should have a dominant say in what happens in a bank, which is just one example before talking about other stakeholders, such as employees and society.  He therefore believes that firms do need to be very clear about what their purpose is and that surveys show that employees want to work for a firm that has a mission and a purpose that they agree with, which is just as important in investment management as it is anywhere else.

Patrick Hudson, Professor Emeritus in The Human Factor in Safety at Delft University of Technology

Interview starts at 33:45

In Part 5, we spoke with Patrick Hudson, Professor Emeritus in The Human Factor in Safety at Delft University of Technology in the Netherlands on ‘How High-Hazard Industries Manage Safety’.

Patrick Hudson and Russell Goldsmith

Chatting with Patrick Hudson (left)

Patrick is one of the world’s leading authorities on the human factor in the management of safety in the oil and gas industry, in commercial aviation, mining and in medicine and has advised clients such as Shell, Exxon-Mobil as well as Boeing, Airbus, British Airways and many other major global organisations. He was at the conference presenting on ‘How High-Hazard Industries such as Aviation and the Oil and Gas Manage Safety’ and that, if they get that wrong, there are very severe consequences for their people, assets and reputation, which other industries can learn from, particularly on the issue of reputation.

There is of course a lot that those industries now get right, and one thing Patrick highlighted that others need to do is to learn to love your regulator.  However, companies also need to do proper management of the safety and risks so that you know what might hurt you and what you can subsequently do about it, and finally ensuring that you have the right culture, which makes you do the things you know you should do.  He added that he has seen through some of the major disasters that everyone knew what to do, but they never quite got around to doing it.

Patrick has devised his own model on culture within a business with respect to managing safety and risk, based on a previous model by Ron Westrum.

Patrick’s model has five levels:

  1. Generative – Safety built into the way the organisation works and thinks. They stand back from saying we’ll tell you how to do it, to giving people who are faced with the problems the trust that they know what they are doing, having equipped them with resources and training, and where management are listening to them
  2. Proactive – Working on problems that they continue to find. They look forward as well as back and consider what might happen in the future
  3. Calculative – Have the systems in place to manage any issues. They have worked out what are the things that are harming them the most, what’s rare, what works and what doesn’t work – enabling them to get organised into a systematic way of approaching the problems that they are facing that are hurting them. This is a good culture, if a little obsessive. However, this is very good at addressing previous problems, but not necessarily those coming in the future.
  4. Reactive – Safety is important, but they address the issues after something goes wrong. They are not very good at managing risk and safety but do react after an event, which means they look like you are trying to get things right.
  5. PathologicalDon’t care, so long as they don’t get caught! They are only interested in getting the job done and not being caught, although, there is a level below that too, which is called Criminal!  So, whilst Pathologicals aren’t Criminals, if they see a corner to be cut, they will cut it and hope no one notices.  When something goes wrong, the person closest to what went wrong is the one who gets the blame, and the people furthest away will just simply say, “well I told you to be safe.”

James Parsons, Untapped Talent

Interview starts at 44:35

Our final interview was with James Parsons, a leadership coach at Untapped Talent, who had been running a workshop at the conference on ‘The Hidden Drivers of Ethical Behaviour’.

James Parsons and Russell Goldsmith

Chatting with James Parsons (left)

James said that a poll that was run with attendees at the conference, whilst small in number and therefore not necessarily statistically significant, suggested that there might be an ethics problem within the Financial Services industry.  He added that whether there is or there isn’t an ethics problem, there certainly is a perception amongst investment professionals that there is one and this is backup by what we can read in the media too.  However, he said that problems we find that are the product of malfeasance, i.e. wrong doing, are quite rare.  Mostly it’s the result of people being tired, who are trying to do the right thing, but just get it wrong, or architecturally their firms are not set out for success.

Within James’ workshop he was asking attendees to consider four hidden sources of unethical behaviour:

  1. Culture – to what extend does your firm facilitate an open culture where people can challenge without fear of threat?
  2. Architecture – ways in which people can take their concerns offline that isn’t as draconian as whistle-blowing. How are meetings run and how well do hierarchies and structures effect people’s ability to escalate issues or just have an honest discussion?
  3. Networks – What are the informal networks that exist in the business? Are there lots of silos or secret little clans and who are the bridge builders between them?  How can the silos be smashed?  If information isn’t freely flowing round an organisation, then the problems that start quite small can become quite serious and by the time they get to management’s attention, could be well on the way to being out of control.
  4. Wellbeing – If people turn up to work tired, or have personal things going on at home, which, as human beings, they then bring into the office, are they able to say that they are not showing up at their best today, for whatever reason, and so are not in the right state to make an important decision.

From all these though, James feels that the wellness agenda is often overlooked, yet is potentially the one that has the most damaging effect.  He said that if people can see the links between stress and scandal, which he added that the city is renowned for both of those two things, then we can possibly start to take more preventative measures to avoid these issues.

To find out more about the workshop that James was running, go to untapped-talent.co.uk.

All previous shows of the series are available on this website as well as SoundcloudiTunesTuneIn, acast and Stitcher.

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