Ethics are evolving in asset management

Wednesday 16 October 2019

Author: Maha Khan Phillips 

On Global Ethics Day, we look at how the concept of ethics, and ethical leadership, is changing in the investment industry, and where it goes from here. 

Much has been written about the evolution of the asset management business over the last few decades, and how it is changing still. The impact of technology, of globalisation, of changing retirement provisions, longevity, changing fee structures, and a host of other drivers means the investment industry is going through a period of transformation.

Less time, however, has been devoted to examining the role of ethics in investment management, and how ethical considerations are informing, and impacting investment decision-making.
Ethics are important in every profession, particularly those where trust is a critical component of doing business. Underlying investors place their trust in their financial intermediaries, and trust that the investment industry has their best interests at heart.

But ethics, and the concept of what is ethical, is always evolving. Consider the fact that, prior to 1980, insider trading was still legal in the UK, for instance. Some of the challenges investment professionals face today, such as those around technology, simply didn’t exist in the past.

Navigating Ethics

So how should investment professionals think about ethics in a changing landscape?  In 2016, CFA UK launched its Ethical Leadership Programme (ELP), in conjunction with Duke Corporate Education, to address many of these issues. The programme is designed for current and future leaders of the investment profession, who make daily business decisions that impact their clients. It helps participants challenge their behaviours, and establish a new set of skills and practices, and it has created a powerful alumni network of ethically skilled and aware leaders.

Alexandra Hoggard “The Ethical Leadership Programme is more important than ever in such a volatile environment,” says Alexandra Haggard, CFA, managing director, strategic product management at BlackRock.

“The importance of balanced, careful thought underpinned by an understanding of potential consequences for our clients, our firms, and our society is only increasing. The ELP is unique in its ability to give you a ‘sandbox’ to test your thinking in, and develop the quality of your analysis and decision-making. Importantly, it is a group learning experience – so the ELP helps to develop your ability to work within a diverse group of leaders to tackle challenging problems,” she adds.

Haggard was one of the first cohorts on the programme, and believes that the investment industry can only benefit from thinking more about ethical issues, as they are inevitable in any business.

Delivering Social Value


Alex Hoctor-Duncan For Alex Hoctor-Duncan, a 2019 graduate of the programme, the ELP generated a great deal of multi-layered debate around the complexities of ethics. “As an industry, there are times that I feel that we are all over this. And then there are times where I feel we still have more to do,” he says.

Hoctor-Duncan, who is head of sales at Aberdeen Standard Investments, believes investment management is on the front line of financial well-being, and in a position to secure the financial future of its clients. For him, a key issue is longevity - the fact that people are living longer. The investment industry, he feels, should help people manage the impact of their longer lives, not just financially, but in terms of impact on the environment, and on society.
“We are living longer, and we have not considered the unavoidable inequality that comes from this. We are a planet living more on borrowing than on income. Life expectancy has gone up over 40% in two generations. I think that the impact of this is the most profound issue the investment management industry has to tackle in order to deliver financial security in the future. Every third school child born in the Western World today will live to be 100,” he points out.

While people are living longer, birth rates are at a decline, which means there will be intergenerational inequality, Hoctor-Duncan believes. “An individual aged 18 with the right to work will have a very different view of the future than an individual aged 85. But the over 65s are living longer, and there are more of them because the life rate is in decline. If you look at the over 65s as a cohort, the gap between how much money they have and how much money they need is already $70 trillion. If you extrapolate that going forward, the gap will increase to $400 trillion by 2050. It means the investment industry needs to drive a completely new wave of ethical leadership that minimises the need for extended debt, so we can live on income.”

It also means that asset managers would need to stop creating products simply because they are popular, or because they generate shareholder value. “I think we need to bring time back into the conversation, and financial planning back into the conversation. Investment management works at its best when there is a defined goal, a suitable time period for when we try to achieve that goal, and a very clear governance structure that we operate in to achieve that goal. Let’s look at how we empower the individual to be completely in control of their financial security from now on,” argues Hoctor-Duncan.

So what does this mean in practice? Hoctor-Duncan suggests that the ‘governance ecosystem’ required to align both financial security and well-being has to brace ethical leadership as a priority, where prosperity is defined beyond finance and is more about the well-being of all individuals. Individuals have to feel secure in retirement and to know that their impact on the environment and society is deliberate and a choice, rather than a symptom.

One thing is clear – as the asset management evolves, ethical considerations, and discussions about changing ethical challenges, become ever more important.

If you would like to know more about CFA UK’s Ethical Leadership Programme, please email



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