The Raining Credentials  

The Raining Credentials  

By Bill Kelly, CAIA Association CEO

Missions, and the statements that embody them, are typically concise, focused, and executable around some type of formulated plan. Most missions are perpetual, and it’s rare that you will Google any business website and be greeted with the words “mission accomplished.” As many of us execute into perpetuity, even the brand stewards with the best of intentions can drift beyond their stated focus, clouding their purpose and compromising the very product or service that they sought to bring to the end consumer, shareholder or member in the first place.

The credentialing space is not immune to this phenomenon and the FINRA website says it all, as they list a dizzying array of 184 professional designations, presumably for the benefit of the investing public. Greater clarity to the end financial services consumer might have been the admirable intent, but consumer bewilderment is more likely the real end result. Adding to the confusion, more than 60% of said designations begin with the letter “C” and the majority of those portend a professional who is either Certified or Chartered in something that sounds very important. Some are bigger, global, and more recognizable than others, such as the CFA, CFP, and CPA (let the record show that CAIA is there too). These former three are massive member organizations with a global reach which, along with equally massive brands and balance sheets, are constantly looking to codify what it means to be a professional in their requisite industry across very wide curricula.

The contrasts are interesting too, which might explain why we don’t see such a mushroom field of credentials beside the CPA in the accounting space. In fact, the accounting field went from a craft to a profession almost right out of the gate in the late 1800s. It was then that men (perhaps the root of our gender diversity issues today) with surnames such as Cooper, Deloitte, Ernst, Peat, and Waterhouse decided that theirs would be a profession replete with standards, a code of ethics, and a commitment to serve the public.

The innovation around financial services products started even earlier than those very determined accountants, when a Dutch merchant organized the first investment trust in 1774; its modern-day equivalent came to the shores of the US with the first mutual fund organized in 1924. It wasn’t until 40 years later that the first CFA charterholder was minted, and it took another 10 years for the CFP’s early roots to be established. The challenge for all of us is that we are now retroactively looking to professionalize the well-developed and profitable craft of money management, with many moving parts and disparate credentialing interests. It is essential that we succeed, and that model might be in some regions where you would least expect it; perhaps the very populous and growing capital markets in places like China, India, Nigeria, and Indonesia will be our ground-zero where professionalism and the capital markets can develop together.

Credentialing will never be a “one-size-fits-all” proposition in the financial services space and the CAIA Association remains committed to both its mission and the role we must play. On the world’s stage, ours will always be a more narrow but deeper mission than what is taken on by some of our credentialing cousins. We will continue to encourage every single professional practicing in the alternative investments space to make our ethics-based program part of their uniform. We will equally embrace additive opportunities that will accrue to the investing public, such as our recently announced stacking initiative, where the CAIA LII exam represents a completion portfolio to the CFA charterholder. Together, these credentials seamlessly complete each other across the full menu of investment choice spanning the one continuous risk premia spectrum. Embedded and demonstrated common curricula knowledge is recognized (not waived) and the result brings us closer to the profession we must ultimately become.

Seek diversification, education and know your risk tolerance. Investing is for the long term.

Bill Kelly is the CEO of CAIA Association. For more of his insights, follow Bill on Twitter and LinkedIn.

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