Mis-selling or the pushing of unsuitable products to obtain a commission, or failure to provide advice tailored to the client’s need, will be the most serious ethical issue according to 29% of members, up significantly from 13% when the same survey was done last year.
But investment professionals are also are more optimistic than last year about global economic growth in 2013, with a greater number of those surveyed, 40%, who believe the global economy will expand in 2013, a six point increase from last year’s poll.
The annual survey measured the opinion of 6,783 CFA charterholders and members.
“There is mounting optimism around global economic growth from both investors and the financial industry, despite ongoing issues like the European sovereign debt crisis and significantly greater concern about mis-selling,” said Kurt Schacht, CFA, managing director, Standards and Financial Market Integrity at CFA Institute.
“We’ve seen the industry become more vocal about the behaviour which led to the global financial crisis, and survey respondents are emphatic about the need for stronger ethical culture at financial firms. Our members are convinced that to build a more trustworthy industry, change must start with top management to develop a culture where ethical practice is just as important as investment performance.”
While 40% expect the global economy to expand, only 20% believe it will contract, down from 29% a year ago. Those in advanced economies (42%) are more optimistic than members in developing economies (35%).
Almost half of investment professionals, 45%, think the economies of their own countries will expand in 2013, up slightly from 42% last year.
By stark contrast, only 28% of those in Europe expect their economies to expand in the New Year. Those in developing economies (56%) are markedly more optimistic than members in advanced economies (43%).
Other key points in the survey included:
- Half of respondents globally think equities will provide the highest expected total return in 2013, up from 41% a year ago, when compared to bonds, cash, commodities and precious metals. Only 4% expect cash to outperform, down sharply from 2012.
- More than half of respondents (56%) cite a lack of ethical culture within financial firms as the primary contributor to the low level of industry trust. Respondents think the most effective remedy is improved ethical culture from top management, selected by 40% of members as the action that is most needed. Another 24% of members identified the most needed action as increased adherence to ethical codes and standards.
- The most important industry/regulatory action for improving market trust and confidence in 2013 is not new regulations, but improved enforcement of existing laws (26%).
- Survey respondents consider the two biggest risks to global market growth to be the European sovereign debt crisis (37%) and weak economic conditions (31%).
- When asked to rank the three equity markets that will provide the best investment opportunities in 2013, the United States (32%), China (17%), and Brazil (10%) emerged as the top three markets.
- Most respondents (76%) believe that the European sovereign debt crisis will get worse or stay the same. Furthermore, 37% of members worldwide are concerned about the threat of the European debt crisis on the global economy.
- 49% of members expect employment opportunities for investment professionals to stay about the same in the coming year, similar to last year’s finding. Only 17% believe opportunities will increase and 33% think they will decrease.
