John D. Rogers, President and CEO of the CFA Institute discusses how the financial industry and investors would benefit if “an era of fiduciary capitalism emerges.”
Excerpt: Earlier this week, over 1,800 investment professionals took time out to visit Seattle for CFA Institute’s 67th Annual Conference. This was an important opportunity to join an initiative that is about the future of finance and shaping an industry that better serves society. Education has a crucial role to play in helping to restore to financial intermediaries a greater sense of social purpose, and that’s why CFA Institute and other professional organizations exist. A new mindset, one we could call fiduciary capitalism, is worth considering. The leaders here will likely include institutional investors – pension funds, endowments, foundations and sovereign wealth funds – as well as early adopters in the fund management industry. Based on a duty of care and loyalty and the obligation to place the needs of their beneficiaries above all other considerations, these investors share an agenda.
Fiduciary capitalism is well-situated to take on a leadership role for three major reasons: size, technology, and the priorities of major institutional investors. The top 1,000 such fiduciaries worldwide account for $25 trillion, which is more than half the world’s equity market value. When these institutions act together, as they increasingly do in matters of corporate governance and market structure, they can shape the financial markets into the form they desire.