A battle has erupted in a normally quiet corner of finance.
Some finance professionals, who have spent years working to get the coveted CFA credential, are pushing back against the CFA Institute’s efforts to become more inclusive and broaden its influence.
Members have until a Thursday proxy meeting to vote on 11 proposals that, if approved, would change the CFA Institute's constitution. The vote closes on Wednesday for people who do not attend the meeting.
Some members of the Chartered Financial Analyst community are breaking with the organization’s governing body and 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.
These members say the proposals would increase the organization’s flexibility, allowing it to make decisions rapidly without consulting members. Dissenting members are also concerned with the lack of clarity in the proposals.
The CFA says that these are semantic changes that won’t affect how it operates and that there are no new classes of 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 via email.
“This proposal simply acknowledges the reality of who we serve today, which represents a footprint that is considerably larger than our core charterholder base,” he added. “Full members will remain the only group that can vote.”
The CFA Institute administers exams and provides educational research for investment industry analysts and others. There are now 195,000 charterholders. The Institute holds annual meetings, which include proxy votes.
These 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.
Dissenting members plan to vote against three of the 11 items in this year’s vote. These three proposals would amend the Institute’s articles of incorporation and bylaws, consolidating the organization’s stated purpose to provide the Institute with “flexibility for future expansion,” including the ability to add new categories and criteria for membership.
Institutional Investor spoke with nine CFA members with varying levels of ties to the organization, each of whom raised concerns about the proposals and the proxy voting process. Some of those sources spoke on background due to concerns about future employment prospects.
While these sources were vocal in their opposition to the proposals, Hickerson said voting returns so far have shown “overwhelming support” for all the proposals.
According to one source, some regional societies have sent out emails encouraging their members to vote against certain proposals.
One email, sent by the CFA Society of Spokane and seen by Institutional Investor, said: “We believe some of these proposals, if enacted, would harm all societies around the world, but would most negatively impact smaller societies which operate less independently, such as CFA Society Spokane.” A representative from the Spokane society could not be reached for comment on the email.
Christian Dreyer, the former chief executive officer of the CFA Society Switzerland and CFA charterholder, is one member voting against the three proposals.
In an interview with Institutional Investor, Dreyer said he wants more clarity about the Institute’s intentions.
“This request comes without coherent reasoning, so they’re just asking membership to grant it flexibility without really telling the membership what they would need to use that flexibility for,” Dreyer said.
According to another regional society member, the Institute’s board wants the flexibility to “change quickly and make a lot of changes” without input from its vast membership.
“I know it’s a hard thing to get consensus when you’ve got a membership of [195,000] people around the world, but my view is that that’s your obligation,” they said.
The CFA Institute said the passage of the proposal won’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.”
One member and former president’s council representative, Richard Mundinger, is not surprised by the attention CFA members are paying to the proposal.
“Everybody is an analyst,” Mundinger said by phone. "We're not salespeople,” 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.
The CFA Institute, meanwhile, said that the voting process has been the same every year, and noted that members were given “ample time” — 58 days — to review the proxy.
Members have also been vocal about their dissent online. On Monday, Christopher Bloomstran, president and chief investment officer of Semper Augustus Investments and long-time CFA charter holder, posted a Twitter thread urging members to “carefully review” the proposals, raising concerns about broadening non-CFA charter holder membership categories.
This dovetails with greater online criticism of the Institute. Lutfey Siddiqi, a CFA charter holder who spent nine months as a member of the Institute’s executive team before departing in September 2021, has been critical of the organization leading up to the proxy vote. In his view, the CFA Institute lacks clear goals and milestones and is missing fundamental governance and transparency standards necessary to thrive as an organization.
“The focus on the proxy vote might be a very convenient distraction and getaway card for the Institute and its fundamentally weak governance,” said Siddiqi.
Ahead of the Institute’s proxy vote, Siddiqi published a letter asking the CFA Institute to provide details on the independence of its board, the organization’s long-term strategy, performance measurement practices, and the CFA’s financials.
“There is enough to ask some serious questions on whether the institute is degrading the CFA brand through its own conduct,” Siddiqi said. He added: “And on all three counts — professional standards, disclosure and transparency, governance and stewardship — there is a lot of room for improvement.”
Mark Lazberger, the board’s chair, as well as vice chair Tricia Rothschild, responded to his letter soon after.
“We strongly disagree with your assertion that the CFA Institute brand is being de-emphasized. It is an invaluable asset — our most valuable, in fact — and one that we have carefully nurtured over the past 75 years and will continue to do so,” the letter said.