CFA Society of Chicago Distinguished Speaker Series Luncheon featuring Charlie Dreifus, CFA from Royce Funds

I have just completed my sixth week of interning with the Chartered Financial Analyst (CFA) Society Chicago, a non-profit whose goal is to “lead the investment profession by promoting the highest standards of ethics, education, and professional excellence; to shape an investment industry that serves the greater good; and to serve as the premier local resource for Chartered Financial Analyst designees, candidates, other investment professionals and our communities.” As a part of the global CFA Institute, the CFA Society Chicago focuses on providing opportunities to their members for development through all stages of their career and creating a comradery where individuals share opportunities and insight with each other. One earns their CFA designation, the global gold standard in the investment industry, by completing four years of industry experience, and passing a series of three, six hour long exams. These exams focus on basic knowledge of investment tools at the first level, valuation, effective portfolio and wealth management at the third level, and all three have a very strong emphasize on ethics. More in depth information of the CFA program and process can be found on the CFA Institute website.

Many of the Chicago area CFA charterholders, those that have earned the designation, serve in leadership and advisory roles throughout their communities. The CFA Society Chicago aids this endeavor through their “Investing in the Community Initiative” by connecting members with board and service opportunities at various organizations where they could use their unique skill set as investment professionals to really make an impact. These organizations include the Arts and Business Council, Executive Service Corp, and Goldie’s Place among many others. Furthermore, the CFA Society Chicago has a financial literacy initiative to educate high school students on the fundamentals of personal finance including: bank accounts, credit cards, loans, creating a budget, and even business plans. They typically team up with other organizations such as the Council for Economic Education that present to opt-in student audiences and the Embarc (Empowering Minds, Building Achievement, and Reconnecting Communities) Chicago to increase their impact.

The CFA Society Chicago is led by a core group of full time employees and an elected board of directors, but much of the value it provides stems from eight CFA charterholder volunteer led advisory groups focusing on areas such as professional development, CFA women’s network, and education seminars. One of the advisory groups and leaders within the CFA Society Chicago identified that there is a need for a resource that introduces individuals to the various roles and areas that CFA charterholders work in, what their roles really consist of, and their professional paths. However, this project proved to be very time intensive for the professional staff and volunteers on top of their many other responsibilities. That’s where I come in, I interview high performing CFA charterholders who work in various financial roles throughout the Chicago area including: chief investment officers, vice presidents of global risk management, senior portfolio managers, financial advisers, and entrepreneurs among others. I and two other individuals collaborated on a set of interview questions to ask these professionals ranging from their industry, background, role, how they serve their community, their CFA experience, and advice to those interested in a finance career.

Additionally, in my endeavor to gain a holistic view of the organization, I have participated in the advisory group meetings which meet once a month. While I have been involved in many leadership roles during my Valpo experience, I did have to step out of my comfort zone to voice out my opinions and ideas in these meetings regarding recent and potential programs with to these industry leaders who are operating at a higher level after only being involved with the organization for a short time. Furthermore, I have gained a deeper appreciation for the ongoing discussion on ethics. For example, I was fortunate to attend a distinguished speaker series event featuring Charlie Dreifus, CFA, one of five nominated to be Morningstar’s domestic-stock fund manager of the decade (2000-2010), entitled “The State of Disciplined Value Investing”. One of the areas Mr. Dreifus focused in his talk is the prevalence of companies solely reporting non U.S. Generally Accepted Accounting Principle (GAAP) values in financial documents. While non-GAAP values can provide a clearer picture of a company’s underlying business, they make it hard to compare companies in the same industry because these values are created by adding or subtracting from GAAP values. Furthermore, non-GAAP values typically paint a more appealing picture of an organization’s performance, and can therefore be misleading to investors. Mr. Dreifus challenged the audience, CFA charterholders, candidates, and student members, as current and future leaders in the finance industry to serve as an example by living up to the fiduciary promise- a requirement to act in the best interest of clients and stakeholders-, and to put in the extra effort of calculating and using GAAP values when they are not reported.

Compared to many of the organizations that my CAPS Fellow colleagues are serving with, this is a different type of non-profit, but that is what I was searching for. I was seeking an organization that applies their technical knowledge, professional experiences, and network to set the pace within their industry while serving their community. As a finance student, I have become familiar with the ethical lapses of individuals in organizations that were key drivers of the financial crisis and many recent instances of regulators imposing fines on organizations for illegal and unethical activity. What will lead to less breaches of the fiduciary agreement and unethical activity is a focus on ethics at the individual level such as what is done through the CFA program and their ethics pledge. Charterholders must sign this ethics pledge when receiving their designation and re-sign this promise – to globally uphold, and improve when possible, ethical and professional conduct in financial markets- every year to maintain their designation.

Steven Babitch (Left) Class of 2016 and Jacob Plummer (Right) Class of 2017, Chicago Council on Global Affairs Emerging Leaders

I became accustomed early in the summer to my daily, approximately 4 hour round-trip commute from Valparaiso, IN to Chicago, IL via the ChicaGo Dash. Additionally, I have become familiar with some of Chicago’s surrounding neighborhoods and the L transit system through my use of Airbnb to capitalize on my time in the city by attending various events. These events have included the Chicago Council on Global Affairs’ and Financial Times’ Chicago Forum on Global Cities, the Emerging Leader’s Perspectives on Innovations in Energy and Technology, and the CFA Society Chicago Industry Round Table among others.

So far I have learned much during my internship about the various roles of CFA members, their different career paths, ways that they serve their communities, and the challenges that they have overcame. I am looking forward to meeting more CFA charterholders, sharing these insights with others, and pinpointing the areas where I can apply my skills, talents, and interests to serve best.