The role of the Chartered Financial Analyst
By Devin Jayasundera
Q: In a complex and volatile financial world how valuable is it for finance professionals to acquire a qualification like CFA?
A: The CFA charter holders provide background and cover the fundamental of markets in terms of fund assets management. I think it is very critical to maintain the focus because it’s easy in volatile markets to sway from what is fundamental. So the CFA programme teaches one to be professional and think from a longer term perspective rather than being influenced by short term market movements.
Q: The MBA has always been the academic benchmark for business professionals in the world. Now CFA is also a highly-recognised professional qualification, which is equivalent to a MBA. In your opinion, what is better to have a MBA or CFA, or is it both?
A: Both qualifications are complementary. The CFA programme is concentrated in the field of finance and the investment evaluation processes. You will see a number of professional who are charter holders working in the areas of corporate finance, particularly in the treasury function and in capital budgeting. MBA provides you a broader base with a management background, which CFA does not cover. Marketing, management of people and organisational behaviour are some aspects that MBA programme covers which benefits individuals who are supervising people.
When you look at MBA vs. CFA, the way we look at it is both. It’s not one or the other. One has to look at in terms of what/where your future goes out. CFA programmed is designed for people who are in the investment management process. If you are going to be in that arena, CFA is what I recommend.
Q: What’s the difference between CFA and a Master of Finance degree?
A: CFA is practice oriented and more relevant. It involves a concept of practice analysis. The difference between an academic programme and CFA is that CFA is integrated with a practitioner-oriented approach. Also the curriculum stays up with the changing market place, as our employers and industry leaders suggest what should be in our curriculum.
Q: How do you assess the financial infrastructure in Sri Lanka and what areas do you think that we should develop?
A: Unfortunately, I will have difficulty commenting on that because I have not deeply studied the financial infrastructure of the country. However, I will say this in a generic point of view. Every market should make sure that there are sufficient numbers of professionals in the market place. Also the financial markets should be open and more transparent so the profession can prepare proper evaluation and guidance. It should also make sure that there are sufficient rules and regulations in place to protect investors and regular banks.
Q: The Government is very keen on making Sri Lanka as a financial hub in the region. What is your opinion on this?
A: As you look at countries in Asia, you see that many of them are growing rapidly, and having a strong financial market is a critical infrastructure. I applaud Sri Lanka for their efforts to enhance their financial market. Because it is financial markets that ultimately support the rest of the industry. So having an influential and strong financial market will supplement the economic growth in the country.
Q: You started as an engineer and then moved into the finance profession. This trend has been in increasingly popular in India and now even in Sri Lanka. What is the reason behind this?
A: There are two aspects of engineering, where it’s logical and mathematical, and this is the same way as finance. There is a natural affinity between the two professions in terms of the fundamentals. So with engineering fundamentals, it was very easy for me and also for the other engineers to work in the finance profession. I was able to grasp the finance principles quickly and thoroughly enjoyed just because I was able to go through that programme with my engineering background.
The finance profession requires a higher expertise in the fields of analysis and having scientific background combined with finance makes a better analyst to work in the finance profession.
Q: From Bernie Madoff to Raj Rajaratnam, the finance profession has been tarnished to some extent in the recent years due to inside trading and other corruption-related activities. How does CFA address such issues and ensure it produces finance professionals with integrity?
A: It is unfortunate that events such as these occur. It is individuals such as these who give the profession a bad name. We are fortunate that the CFA programme and our charter holders abide by the highest ethical standards and in this way we try to get to our charter holders to continue to promote the highest ethical standards. By our charter holders engaging in a market place with the highest ethical standards, hopefully we expose those who are not following these standards.
A market cannot function without trust in the market place and maintaining it is very critical. If all the investors lose the trust in the market place, the entire financial system can collapse. So CFA strongly believes in it and we want to be the strongest voice when it comes to ethics, standards and integrity.
Q: What are your recommendations in improving the relationships between the financial markets in the South Asian region?
A: In order for markets to integrate, it requires that there are a substantial number of regulations, particularly in the areas of corporate governance and the disclosure of information. For cross border transactions to occur, we should ensure countries get together to create infrastructure and regulations, which allows both markets to work in the same level playing field.
There are many Asian countries that are trying to look into that at present; East Asian countries like Philippines, Indonesia, Malaysia and Singapore are trying to figure out how to create a common platform with common rules and regulations that would allow cross border transactions. I think that would allow India and Sri Lanka and other do the same.
