Promoting Ethical Standards for Investment Professionals

President of Greece’s CFA Society, Loukas Dedes, says Greece saw a surge in the number of CFA financial professionals during the crisis years as the importance of financial literacy came to the fore.

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GIG: Greece has a well-educated workforce, yet a weak savings and investment culture. Why do you think that is? Would you say that the fiscal crisis of the last decade has resulted in collateral benefits in this regard?

Dedes: The country’s labour force, especially during the last three decades, has generally achieved an advanced educational level. This is not aligned, though, with an investment and savings culture that is observed in other developed economies. In my view, this is a consequence of the poor financial literacy background of the Greek population. This phenomenon is particularly attributed to the fact that financial literacy is still not regarded as a subject that the population must be educated on. This is a misconception since financial literacy is vital for the younger as well as for the elder population.

It is important to realise how many aspects there are to financial literacy. It can help someone manage their personal income, savings and investments, and to get educated on how credit works – whether it has to do with borrowings or even with the rational use of a credit card. Especially in countries like Greece, where there are often signs of irrational consumption behaviour, financial literacy can play an important role.

During the years of the fiscal crisis, the necessity for financial literacy became more evident in our country and, fortunately, in the crisis aftermath there are already signs of a more rational behaviour from the side of the workforce. Last but not least, in our country, where there is so much debate about the pension system and its future capacity, financial literacy can help the workforce realise how their retirement income is created and the alternative ways in which this can be managed.

GIG: The CFA Society has grown considerably during this adverse period. How did you achieve this? Where do you stand today, and how do you aspire to move forward?

Dedes: It is true that the membership base of CFA Society Greece has experienced an exponential growth over the last few years, especially during 2017-2019 when we were happy to welcome more than 30 new members. This number is significant, and everyone who is aware of how difficult and demanding the journey is to attain the CFA charter can verify it.

This growth has two pillars. The first one sides with the need for finance professionals, either the younger or the established ones, to expand their knowledge and differentiate themselves in their effort to find a better job or advance in their current one. We saw many of our members change jobs, get promoted or move to major financial centres abroad during the years of the crisis. The CFA charter is certainly a determining factor in their achievements.

The second pillar is the effort of our society to increase the awareness of the CFA charter in Greece and to promote its value. We have strong connections and continuous cooperation with local regulators, recruitment firms, financial institutions, universities, associations, and fora. Our main focus now is to build stronger relations with all these stakeholders and make our voice heard within the Greek financial community. Our vision is to promote ethical standards in the investment profession and to provide continuous education and professional development to our members for the ultimate benefit of the society.       

GIG: Ethics is at the foundation of the CFA curriculum. How do you keep your head in place when those around you are losing theirs? Are there challenges particular to Greece in this regard?

Dedes: Ethics is one of the cornerstones of the CFA curriculum and it demonstrates the qualities that an investment manager must have while serving the profession and his/her clients. It is a blueprint of personal integrity, moral behaviour, and self-development. 

CFA Society Greece is an advocate of ethics in the local financial community and we try to promote integrity through our events, statements, and collaboration with our partners. We strongly believe that ethical behaviour is a distinguishing factor for a CFA charter holder. Ethical behaviour is also promoted to university students via an annual ethics challenge, organised by the CFA Institute, where a case study is analysed by university teams to define the proper behaviour of an investment professional.

In Greece, there have been incidents lately where ethics are, more or less, linked to the corporate culture and governance of a firm, and not so much to individual practices. CFA Society Greece participates in the Hellenic Corporate Governance Council, contributing to the adoption of best practices on corporate governance for Greek listed companies. In addition, we support and promote within the local market the adoption of the Global Investment Performance Standards (GIPS 2020), the Asset Manager Code, and the Pension Trustee Code of Conduct of the CFA Institute. 

GIG: On which parts of the Greek economy would you advise investors to focus? What are the hidden pockets of value in your opinion?

Dedes: The role of CFA Institute and CFA Society Greece is not to provide advice to investors but to promote ethics in investment management practices and to advocate for investor protection. Against this backdrop, we are monitoring the Greek market developments so that we can have a view where our initiatives should focus. Investment management in Greece is currently heavily focused on non-performing loans (NPLs) – their acquisition and management.

We also observe many initiatives and start-ups in fintech and payment services that are worth our attention. In parallel, there is a global trend to promote investments with an environmental, social and governance (ESG) dimension. The CFA Institute is a strong advocate for ESG integration and disclosures by companies. Green finance, which is closely linked to ESG, is also a field in which investors have often allocated significant parts of their portfolios during the last years. Therefore, I consider innovation and the development of an ESG culture as catalysts to increase investors’ appetite in the Greek market. 

GIG: Do you see Greece converging with European economies once again? If so, how soon?

Dedes: Greece is trying to gain momentum again in the European financial landscape, and there are positive signs that this can be achieved. The recent upgrade of the Greek sovereign by some rating agencies; the fall of the Greek government bond’s yield to record low levels after the crisis; the approval by the European Commission of the project Hercules for the reduction of the Greek banks’ NPLs; and the acceleration of the process for some iconic investments in the country can improve the sentiment of international investors and attract their attention back to Greece.

Nevertheless, the way to convergence with the other developed European economies will be long and full of challenges. In my personal view, in the short term the country’s economic policies need to be credible – ensuring fiscal sustainability, implementing necessary reforms, and avoiding procrastination. However, the problems of the Greek economy mostly continue to be structural. There is a need to have a consensus on the production model that we can serve as an economy, and to act upon the pressing needs of the pension system that can derail the fiscal capacity of the state again. Without such decisions, the way of convergence can prove long and bumpy.  

GIG: Are you worried about an increasingly turbulent global backdrop? Put differently, what are you worried about?

Dedes: Global financial markets are usually volatile as a consequence of economic and geopolitical factors. We live in a period where those factors are amplified and the effects on the global economy cannot be predicted with acceptable confidence. For instance, the trade war tension between the US and China, Brexit, central banks’ policies, the necessity to take measures to tackle climate change, and the tokenisation of assets all create a level of uncertainty regarding financial stability. Particularly, the fact that monetary policy seems to have exhausted its potential to stimulate economies is a threat that policymakers must act upon coherently and swiftly. Policymakers should also examine ways to alleviate the consequences of global non-financial companies (i.e., Facebook, Amazon, Google) disrupting traditional financial services. From my perspective, developed countries need to address population ageing and climate change with common initiatives and credible policy implementation.

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