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Polls Closing for CFAs Voting to Alter the Institute’s Framework
Forbes Magazine once called CFAs (Chartered Financial Analysts) “The Rock Stars of Finance.” Each year the CFA Institute consisting of 195,000 financial analysts that have succeeded in acquiring one of the top designations in investment and finance, holds its annual meeting. This year’s meeting has created significant disunity among CFAs. The division in thought is with three of the 11 proxy votes.
Along with the election of four governors and a Chair and Vice Chair, charter holders vote on proposals. This year three of those proposals could serve to change the Institute’s Constitution. One of them would provide for new degrees or classes of membership. This doesn’t sit right with many of the current members that are casting their ballots.
Annual CFA meetings are rarely controversial. However, this year, some of the organization’s 160 regional societies have recommended that their members vote against some of these proposals.
Battle of the CFAs
The CFA exam is a three-part test, usually taken over as many years. The pass rate for each of the three test levels is quite low. Since 2010 Level 1 ranges from 22%-49%, with an 11-year average of 39%; Level 2 ranges from 29%-55%, with an 11-year average of 44%; Level 3 ranges from 39%-56%, with an 11-year average of 50%. Some financial analysts, who have spent years working to earn the difficult and extremely coveted CFA credential, are pushing back against the CFA Institute’s attempt to become more inclusive and broaden its influence.
Members have until today (July 14) to vote on 11 proposals. This year the Institute’s board is asking for the flexibility to “change quickly and make a lot of changes” without input from its vast membership. This would have the effect of changing the organization’s bylaws.
Voting Against
A significant number of members of the Chartered Financial Analyst community are voting against the institute’s current governing body by planning to vote against some of the proposals, which they argue would open the door to adding new classes of membership to people who haven’t taken the CFA exam, making the credential less valuable and diminishing the reputation of the Institute.
The overall mindset of those voting against is partly the lack of clarity or definition in the proposals. The concern is it would increase the organization’s flexibility, allowing it to make decisions rapidly without consulting members.
One member and former president’s council representative, Richard Mundinger, told Institutional Investor he is not surprised by the attention CFA members are paying to the proposal.
“Everybody is an analyst,” Mundinger said, adding that analysts have spent time combing through the 108-page prospectus to determine how to vote and how the proposals will affect the value of their CFA credential.
Supporter of the Change
The CFA governing board says the changes are mostly semantic changes that won’t affect how it operates. There are no new classes of CFA designations or membership yet.
“CFA Institute has many constituents, including the hundreds of thousands of candidates who take our exams every year but who do not qualify for membership either because they have not yet passed all three levels or because they do not have the required work experience,” Matthew Hickerson, CFA Institute’s head of global media relations and executive communications said to Institutional Investor. “This proposal simply acknowledges the reality of who we serve today, which represents a footprint that is considerably larger than our core charter holder base,” he added. “Full members will remain the only group that can vote.”
The CFA Institute said the passage of the proposal wouldn’t change how the organization operates.
“It does not remove or diminish the rights of any stakeholder group,” Hickerson said. “The proposed changes preserve the important roles of members and societies, who continue to be featured in detail by the provisions of the CFA Institute Bylaws.”
Take Away
The CFA Institute Board of Governors, in an attempt to gain more flexibility in directing the organization, is running up against voters who are “Rock Stars” when it comes to analyzing the value of proposals. Many have developed strong opinions and are not afraid to place their thoughts above that of the governing board.
The board strongly disagrees that the CFA Institute brand is altered in a way by these proposals that would de-emphasize the Chartered Financial Analyst members.
Managing Editor, Channelchek
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Sources
https://www.cfainstitute.org/en/about/governance
https://www.forbes.com/advisor/investing/cfa-chartered-financial-analyst/
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