Stock analysts woo investors with service code

Stock market professionals in East Africa have signed up to put the interest of investors first as trust in financial agents wanes globally.

Through the Chartered Financial Analyst Society East Africa (CFA Society EA) that brings together investment professionals, the market players on Monday launched a ‘Statement of Investor Rights’ at the Nairobi Securities Exchange.

The document is a declaration of how the professionals will treat investors through the code of conduct.

The move is supposed to improve investor confidence in the intermediaries following a global survey by the CFA Institute that revealed that lack of ethical culture was the leading contributor to distrust in the industry.

“The recent CFA Institute 2015 Global Market Sentiment Survey polled 5,250 global investment professionals. 63 per cent of them pointed to a lack of ethical culture within financial firms as the factor that contributes most to a lack of trust in the financial industry,” said the CFA Society EA president Eleanor Kigen.

According to the survey, members believe better alignment of pay with investor objectives and zero-tolerance by top management to ethical breaches improve investor trust and confidence.

Ms Kigen said: “The CFA survey clearly shows trust problems in the global capital markets industry stem more from flawed internal firm culture rather than from poor government regulation and enforcement.”

Some of the rights investors are entitled to are disclosure of conflict of interest and service charges. “We aspire to build and lead the investment management profession. To do this we must continue to stand together for what is right, and in investors’ best interests. All investors have the right to be served by professionals who act as stewards of their savings,” said Ms Kigen.

Geoffrey Odundo, the CEO Nairobi Securities Exchange, said professionals must always put investors first.

“The statement is intended to help investors demand that financial professionals abide by these rights. We want to inspire our community to make real impact and foster a market environment, where investors can thrive,” said Mr Odundo. The global campaign began in May 2014.