Rogers: Getting America to Trust Wall Street Again
I have been around long enough to remember when my alma mater banned the U.S. military from recruiting on campus, in protest against the Vietnam War.
Public reaction like this eventually led to an agonizing but ultimately re-energizing transformation for our armed forces: we are now united by concern for the members of our armed forces, military service is held in high-esteem, and ROTC programs have returned to college campuses. Fast forward a generation, and the protest has shifted to the financial industry.
Wall Street firms, once treated as a guaranteed ticket to success, are beginning to face the same level of animus at several elite college campuses.
After 27 years in the investment profession, of course I’m concerned by this change in public perception. However, when my college-aged children talk to me about a career in finance, I'm still going to give them a “thumbs up.” I can sum up the basis for my blessing in two words: stewardship and community. While these may sound like values espoused by members of the Occupy Wall Street movement, these concepts have everything to do with the practice of finance.
I believe that the next generation of leaders in finance will be defined not by the amount of money they can amass, but by the stewardship they exercise as fiduciaries and the responsibility they demonstrate to their communities.
We are overdue for this change.
The current generation has ridden a fortunate 30-year tailwind that carried financial capitalism to unsustainable levels. The industry has overwhelmed the profession and finance has become an end, rather than a facilitator, of economic activity. There is no question that Wall Street has always attracted people motivated too much by greed and egotism, and in recent years we’ve seen the worst of them. I'm glad that the bright sunlight Supreme Court Justice Louis Brandeis once described as the best disinfectant is now being trained on the finance industry's blemishes. Yet, I am dismayed to see many of today's leaders in finance stuck in a state of outright denial. A 30-year tailwind makes "waiting it out" a tempting strategy, but it’s unworkable and unrealistic.
Hiring legions of lobbyists to hold back the tide, issuing bland assurances of the status quo, and circling the wagons with fellow titans of industry, are tactics that have outlived their usefulness. A new generation of ethical leaders and stewards of investors’ interests will need to follow a different playbook. Investors and those who make capital markets work need to reconnect returns with a larger purpose: that capital is meant to be supportive, not an exercise in take or be taken. Asset owners and voters won't put up with detached and extractive responses from those entrusted with extraordinary power and our wealth – nor should they.
Young people entering the world of finance have an incredible opportunity to discover the satisfactions of being trusted, not reviled – and of stewardship instead of opportunism. Firms that tap into this youthful energy will find they have struck gold. We are just beginning to see signs that financial leaders are on the cusp of recognizing this truth. In his recent book, "Stewardship: Lessons Learned from the Lost Culture of Wall Street", John Taft, CEO of RBC Wealth Management, argues for the importance of establishing service to others to create a more stable and compassionate financial system. Progressive organizations have revived the notion of servant leadership, which was once ridiculed by the control-oriented mindset that ran Wall Street and now provides an alternative and refreshing vision.
Here's what I want my children to know about finance: you have the opportunity to build your community, whether you define that as your neighborhood or the whole world, or anything in between. You get to match people who have funds to invest with others who have good uses for those funds. There are professional standards of ethical behavior to apply, technical expertise to develop, and lessons learned only from experience to apply to complex problems that will challenge and serve you well your entire career. And finally, there is no better feeling than knowing you have helped your client realize their dreams.
John D. Rogers, CFA is the President and Chief Executive Officer for the CFA Institute. Rogers joined CFA Institute in January 2009 after more than two decades of global experience as an investment practitioner and executive in the Asia-Pacific region and the United States. Mr. Rogers worked with Citibank and CIGNA in Japan and Australia prior to joining INVESCO.