Remember the Age and Purpose of Our Profession

We should remember two aspects about our profession. The first is that we began as an honest and noble profession that adhered to the concept of “fiduciary.” The second is that we are a young profession and should not accept our history as “the norm” or as predictive of the future. The series of Reflections articles has been a wonderful treasure of thought and perspectives from some of our best. The opportunity to have noted students of capital markets sit back and share their accumulated wisdom meets the test of the extraordinary.Two aspects drawn from my experience that I would like us to reflect on are (1) our origins and (2) the age of our profession.In the 1970s when I joined this profession, rarely would the question of whether a young apprentice's motivation was greed have arisen. The profession was honest and noble, and the whole investment community adhered to the concept of “fiduciary.” We knew that the only way to make a living in this business was to deliver the goods. Sadly, all these characteristics have changed. And some of our newcomers are amazed to think that this profession was ever anything but “a money job.” We need to remember our roots.The people who are reading this article, however, are largely in “the choir” and don't need preaching to remind them of their duties and ethical responsibilities. The question is how to spread the preaching to other choirs. One way is through the actions of our readers. We can succeed as a profession only by placing client interests above all else. Investment management is about service and integrity. If readers execute this philosophy well, they can generate a highly profitable business in the classic economic definition of profit and be true to basic principles.In addition to our fiduciary roots, we need to remember that our profession is very young. When I began work, supposedly normal equilibrium conditions were still in the formative phase. Conventional wisdom about the key relationships in the markets suffered from severe overconfidence. The theory and science developed in the 1970s, together with the pension explosion of that time, changed our thinking, and we should not accept our history as the norm or as predictive of the future. We should not close off debate about relationships in the markets. They will change, because after all, markets are largely about ideas and people.