Australia’s economic growth will suffer if trust is not rebuilt in the financial services industry according to the CFA Institute.
CFA Institute’s president and chief executive Paul Smith told Investor Daily that the financial services served an important part in Australia’s economic future.
“The purpose of what we [financial services] do is to help the economy grow and move forward and to allow Australians to achieve their financial aspirations,” Mr Smith said.
Mr Smith said that if people did not trust the financial system then it could lead to them not participating in the economy.
“If that trust is broken then, economically, growth is damaged because people don’t circulate their wealth through intermediation into the end economy. So that’s the challenge we face here is,” he said.
An unintended benefit of the royal commission is that it is shining a light on the industry and making people think about their financial future said Mr Smith.
“We worry about our health and not our wealth and I think that a huge benefit of the royal commission is that it’s making a few people sit up and say, ‘I haven’t really thought about that and I should’,” he said.
Mr Smith, speaking at the the CFA Society Sydney luncheon, said that the industry has a huge chance post-royal commission to build trust with the public again.
“How we respond to the challenges that are being laid down for us will really indicate whether we are worthy of being given another chance to build a profession that truly serves the society that we live in,” he said.
CFA Institute and its societies in Australia are committed to building the financial industry into a profession and Mr Smith said it would take a mix of professionalism and credibility.
“Credibility comes from credentialing, it comes from a track record. Professionalism really is about how you hold yourself out as a fiduciary to your client. If you can put the two of them together we believe that you can create that trust and that value,” he said.
Mr Smith said if the industry can create that trust and show its purpose to the public then it would achieve professional status.
“If we focus on trust and purpose we can, and we will, build a profession that serves all of Australia’s citizens and is deserving of society’s support and society’s ability to then confer professional status upon us,” he said.
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