three-year strategic plan update v1 · relevant and accessible credentialing programs . 100% member...

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THREE-YEAR STRATEGIC PLAN UPDATE v1 FY2017-FY2019

OUR STRATEGY To develop future professionals through relevant and accessible credentialing programs

100% Member Market Penetration

To deliver member value through localized professional recognition, continuing education and career development support

100% Member Satisfaction

To build market integrity through industry engagement and adoption of standards that improve investor outcomes

100% Industry Market Penetration

CFA Society Use Only - Not For Public Distribution

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TABLE OF CONTENTS Statements of Governance ........................................................................................... 3

Mission ..................................................................................................................................... 3 Vision ........................................................................................................................................ 3 Values ....................................................................................................................................... 3

Strategy .......................................................................................................................... 4

Strategic Challenges ..................................................................................................... 5

Goals .............................................................................................................................. 6 1.0 Grow Global Relevance, Extend Local Reach ............................................................. 6 2.0 Deliver Member Value .................................................................................................... 7 3.0 Advance Professionalism and Professional Recognition ......................................... 7 4.0 Build Market Integrity to Benefit Society ..................................................................... 8 5.0 Enhance Operational Excellence ................................................................................. 9

Risk Profile .................................................................................................................. 10

FY2019 Global Goals and Objectives Summary ....................................................... 11

Appendix ...................................................................................................................... 12 Strategy Execution ................................................................................................................ 12 Strategic Actions ................................................................................................................... 14

Developing Future Professionals.......................................................................................... 14 Deliver Member Value .......................................................................................................... 16 Build Market Integrity ............................................................................................................ 20

Regions ................................................................................................................................... 24 Americas (AMER) ................................................................................................................. 24 Asia Pacific (APAC) .............................................................................................................. 26 Europe, Middle East, and Africa (EMEA) ............................................................................. 28

Organizational Capabilities and Infrastructure ................................................................... 30 Relationship Management .................................................................................................... 30 Services Delivery .................................................................................................................. 31 People .................................................................................................................................. 31 Process ................................................................................................................................ 31 Technology ........................................................................................................................... 31 Financial Management ......................................................................................................... 31 Governance, Compliance, Risk and Ethics .......................................................................... 32


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Statements of Governance

Mission The mission of CFA Institute is served by generating value for core investment management professionals and engaging with the core investment management industry to advance ethics, market integrity, and professional standards of practice, which collectively contributes value to society. Our mission is: To lead the investment profession globally by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society.

Core investment management professionals are considered to be those individuals primarily involved in activities related to the investment decision making process—generally portfolio managers, financial advisors and research analysts on both the buy and sell side—with relevant work experience as defined in the CFA® charter work experience requirements. The core investment management industry is comprised of firms (or larger firm business lines) primarily engaged in asset management (mutual funds, hedge funds, private equity, real estate investment, investment research and ratings, and investment advisory services), wealth management, fiduciary asset ownership (such as pension funds, endowments, and sovereign wealth funds), and their related regulators and standard setters. Vision CFA Institute seeks to set professional standards for investment management practitioners and broadly engage other finance professionals through their interest and interactions with the investment management profession. Improving outcomes for investors advances our social mission and benefits members through greater demand for educated and ethical investment management professionals. Our vision is to: Serve all finance professionals seeking investment management–related education,

knowledge, professional development, connection, or inspiration; and Lead the investment profession’s thinking in the areas of ethics, capital market integrity, and

excellence of practice. Values As a global, independent organization, we play a role in being a steward and champion of the investment management industry. We believe that financial markets and services should operate in the following ways.

• Investment professionals contribute to the ultimate benefit of society through the sustainable value generated by efficient financial markets and by effective investment institutions.

• Good stewardship and high ethical standards are necessary for trust and confidence to be secured and for society to be served.


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• Financial markets should afford every investor the opportunity to earn a fair return.• Financial markets are more effective with knowledgeable, diverse participants.• High ethical principles and professional standards are essential to positive outcomes; rules

and regulations, while necessary, are not sufficient by themselves.

In addition to direct benefits to their clients, the work of investment management professionals and the impact of the investment management industry also benefits society through improved investor outcomes and the resulting effective allocation of capital that drives economic growth and development.

Strategy

We aspire to develop global financial markets that serve the public interest. The overall outcomes that we believe will contribute to this aspiration are a community of educated, ethical investment management professionals and financial markets that reflect CFA Institute beliefs.

To achieve this aim, our strategy is to develop future professionals through relevant and accessible credentialing programs, to deliver member value that accelerates the professional success of our members, and to build market integrity that benefits investors and our members who serve them.

DEVELOP FUTURE PROFESSIONALS DELIVER MEMBER VALUE BUILD MARKET INTEGRITY

Education is the foundation of professional competence. We develop future investment management professionals through credentialing programs that require the application of technical knowledge and an appropriate ethical framework to guide decision making.

We equip and support members so they can better serve their clients and further develop their professional careers. This aim is enabled through an active local professional community, professional recognition from employers and regulators, and the creation and delivery of high-value content.

Setting global standards and advocating for professional excellence are activities that ultimately benefit society by improving both investor protections and investor outcomes.

The following drivers of change and observations about current conditions have influenced our recent strategic planning efforts.


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Strategic Challenges

The investment profession and the investment industry are changing. As detailed in the Future State of the Investment Profession, several megatrends including technological advances, redefined client preferences, new macroeconomic conditions, evolving regulatory regimes and global demographic shifts are creating the potential for several future-state scenarios that will impact the investment industry and the professionals working within it.

Business Environment Global shifts in economic power, the growth of private wealth, and increasing passive investment management are major drivers of industry change while regulators are increasingly active in setting local standards of practice. There is also a generational shift in attitude toward learning and the use of technology to build and leverage personal networks.

Competition Although we face no single direct global competitor, there are numerous regional competitors and increasing numbers of easier-to-obtain qualifications, including in the private wealth space. At the same time, technology may be disrupting both the investment management and learning/credentialing industries, although it is not clear to what degree.

Member Demographics Although we aspire to lead the investment management profession, our penetration is low, and only a minority of our members today work in core investment decision-making jobs for firms primarily engaged in asset management or wealth management. We do not yet represent the profession.

Credentialing Although the quality of the CFA® charter is perceived to be high, continued relevance is critical and today the CFA Program curriculum is a slow follower of the investment management profession and not the fast follower of core competencies we wish it to be. In addition, brand awareness outside of the investment management profession and within emerging markets is weak.

Member Value Today, the tradition of engaged member volunteers and our global membership network are recognized strengths; however, there is a significant gap between members’ perception of the value they receive and the actual cost in generating that value. This gap is a symptom of the challenge of meeting the needs of professionals with an ever-widening dispersion of demands that are driven by the increasing complexity of investment management itself and our growing global footprint.

Standards & Advocacy Today, we are neither a recognized thought leader for the investment management profession nor an effective advocate for regulatory change. To successfully serve investment professionals and achieve our mission objectives, we must be able to shape the investment management profession and industry to better protect and advance investor interests.


https://www.cfainstitute.org/learning/future/Pages/future_investment_profession.aspx

https://www.cfainstitute.org/learning/future/Pages/future_investment_profession.aspx

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Goals

1.0 Grow Global Relevance, Extend Local Reach

Grow Global Relevance CFA Institute–credentialed professionals should be increasingly present and working in current and developing financial centers and applying their skills and ethical standards to improving outcomes for investors worldwide. This requires, among other actions, that the CFA Program be protected and actively developed as the gold standard of rigor, relevance, and quality during times of market expansion and contraction. Ultimately, our goal is that every investment practitioner will be credentialed by and a member of CFA Institute and a CFA society. Although this aspiration requires that our offerings are locally relevant around the world, we will not lower standards. Rather, this aspiration motivates us to inspire all of those working in the industry to reach for standards that we feel are necessary to advance the profession and improve outcomes for investors. We aspire to 100% achievement of the following goals:

1.1 Membership for all core investment management professionals

1.2 CFA Program participation for all aspiring professionals involved in the investment decision-making process

1.3 CIPM® Program participation for all aspiring professionals involved in investment portfolio evaluation

1.4 Investment Foundations® Program participation by all other staff working in the core investment management industry

To support these goals, we will allocate resources and operate in a regionally balanced manner as a fast follower with the competencies, skills, and technology required as the investment management profession and its professionals shift and change. This result has implications for our practice analysis capabilities and also implies the need to review pricing and transaction capabilities regionally, among other considerations. Additionally, membership offerings may need to be tailored to specific industry segments.

Extend Local Reach

CFA societies and regional CFA Institute staff are best able to meet the local needs of members and are connected with the local employers, regulators, educators, and other stakeholders essential to growing relevance and advancing the mission of CFA Institute. To further enable this goal, we will emphasize CFA society partnership, increase support for societies, and evolve a matrix organization across regions. We aspire to 100% achievement of the following goals.

1.5 Aspiring investment management professionals have access to testing services1 for our credentialing programs

1.6 All members are served by at least a country-based society2 and all CFA Institute members belong to a local society

1.7 CFA Institute societies are satisfied with their partnership with CFA Institute There are nearly 150 societies that constitute a dedicated volunteer base that is much larger than

1Provided that minimum financial, security, operational risk, and other required parameters are met. 2Provided that board-approved conditions for society formation are met.


https://www.cfainstitute.org/programs/cfaprogram/courseofstudy/Pages/practice_analysis.aspx?PageName=searchresults&ResultsPage=1

https://www.cfainstitute.org/programs/cfaprogram/courseofstudy/Pages/practice_analysis.aspx?PageName=searchresults&ResultsPage=1

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the staff resources of CFA Institute. As we work to validate member needs, we believe that our community network of local societies supported by regional CFA Institute teams will be more effective in engaging and creating value for members and investors. As a result, funding and support for societies and regional CFA Institute execution will increase over time.

2.0 Deliver Member Value As a membership-driven organization, CFA Institute must help its members be more successful in their professional practice and deliver immediate benefits at a reasonable cost. Achieving this goal will help us sustain long-term member engagement with CFA Institute and contribute to advancing the mission. We believe that the long-term viability and vitality of the organization is dependent on effectively meeting the needs of our professional members and therefore aspire to 100% achievement of the following goals.

2.1 All CFA Institute members are satisfied with the value of their membership

2.2 All CFA society members are satisfied with their society membership

2.3 All eligible members are retained in the CFA System

A significant part of the organization is focused specifically on understanding, creating, and delivering member value with the intention of growing membership, engagement, satisfaction, and ultimately, retention—especially with local societies. We desire to be the leading membership body of the investment management profession globally and so must adapt our creation and delivery of member value with the changing business environment. CFA societies are essential partners in engaging with members locally and thus require an effective partnership with CFA Institute to deliver member value at the local level.

3.0 Advance Professionalism and Professional Recognition In order to lead the investment profession, it is critical for the profession itself to be established. Therefore, we must convince the investment management industry and its regulators and practitioners to recognize the importance of professionalism and require adherence to its tenets.

We believe that the recognition of the professional standing of our members is critical to advancing the mission and improving our members’ professional practice and therefore aspire to 100% achievement of the following goals.

3.1 Regulator recognition of the professional standing of our members

3.2 Membership and program support by the investment management industry

Brand Awareness

Improving brand awareness has consistently been identified as a key way to increase member value. Because brand development activities can quickly be scaled up or down depending on the current financial conditions of the organization, investments in brand building can consume available resources in a constructive manner while are able to be scaled down quickly in response to changing business conditions or priorities, if required. Brand awareness will also be developed though a comprehensive brand family that includes the formal credentialing programs, such industry standards as the Asset Manager Code (AMC) and the GIPS® standards, and such content such as the Financial Analysts Journal and CFA Institute Research Foundation publications. In addition, increasing branding


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support to societies can also serve as a constructive way to leverage brand investment and further extend our local reach. We aspire to 100% achievement of the following goals.

3.3 Awareness of the CFA Institute brand by investment professionals

3.4 Awareness of the CFA charter by high-net-worth investors in North America

Continuing Education Requirement

To benefit society though improved outcomes for investors, investment management professionals must be supported within a culture of competence that emphasizes appropriate ethical principles and places the interest of clients ahead of personal interests. An important component of this support is the recognition of this professional responsibility by investment management industry practitioners, investors, regulators, employers, and society at large. The public recognition of any profession requires the mastery of the profession’s core body of knowledge, commitment to and enforcement of a code of ethical practice, and the ongoing demonstration of a measure of continued professional competence. The CFA Institute Code of Ethics requires that members “maintain and improve their professional competence,” and by all accounts, CFA Institute professionals commit many hours to continuing education activities. What is missing is the mechanism to fully demonstrate the fulfillment of this professional obligation to continued competence. Therefore, we will also work to develop member support for a continuing education reporting requirement as a way to further promote the professional standing of our members. We aspire to 100% achievement of the following goals.

3.5 Member participation in the voluntary continuing education program

3.6 Member support for a continuing education reporting requirement to maintain their professional credential

4.0 Build Market Integrity to Benefit Society We believe that significant opportunity to advance our mission and benefit both members and investors lies in improving the integrity of the overall investment management environment; therefore, we will invest in increasing investor protection, market fairness, and ethics and professional standards. We aspire to 100% achievement of the following goals.

4.1 Members are satisfied with the value and impact of advocacy efforts

4.2 Systemically important investment management regulations and market policy debates that materially affect investor outcomes are identified; the outcomes of those debates to reflect CFA Institute values that benefit market integrity

4.3 Membership on and relevant impact of targeted advocacy committees

4.4 An effective media presence and media promotion of advocacy and Future of Finance (FoF) priorities

The relevance and gold standard–quality of the CFA Program will be protected and developed as a core and continuing priority for the organization both during times of market expansion and contraction. With that commitment, significant opportunities exist in the regulatory and policy realm that can further advance our brand and better serve members and investors. As a result of this opportunity, coupled with a strong process for monitoring and selecting our policy targets, funding and other resources focused on building market integrity will increase.


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Promote Ethical Standards

As a core value, we believe that high ethical principles and professional standards are essential to positive outcomes for investors and society. We will therefore inspire excellence in ethical conduct with the ultimate goal of zero violations of the codes and standards by investment management professionals. We aspire to 100% achievement of the following goals.

4.5 Investment management firm adoption of industry codes and standards, such as the AMC and the GIPS standards

4.6 Identify and resolve code and standards violations by professional (regular) members We believe that the best way to improve ethical conduct in the industry is three-fold for CFA Institute:

First, and most important, is to grow the presence of CFA Institute professionals within the industry who are ethically trained and focused.

Second, we will work to increase the awareness of ethical and professional standards for practitioners in the investment management industry. This includes increasing client awareness of what to seek or even demand from their investment service providers.

Finally, CFA Institute will swiftly and robustly address violations of its own codes and standards by professionals and advocate aggressively for effective enforcement of industry rules and regulations.

5.0 Enhance Operational Excellence We believe that the ability to execute on our strategy and advance the mission of CFA Institute is dependent on a sound operating foundation and robust enabling capabilities. We will further focus on and invest in developing world-class people, processes, and technology. We aspire to:

5.1 Deliver digital experiences that generate member satisfaction 5.2 Increase organizational efficiency through initiatives such as the Digital Core Transformation, design

thinking, process and project management 5.3 Comply with regulatory, tax, and appropriate public company standards 5.4 Ensure satisfaction with the CFA Institute volunteer experience 5.5 Develop effective global talent acquisition and talent development processes 5.6 Maintain appropriate financial reserves and financial management to support our organization’s

mission and goals Digital technology will be used to create platforms that allow broader reach of content, strengthen the investment management professional community, and maintain the relevance of programs. Effective governance structures and mature business capabilities are necessary to guide the organization in the best interests of members. Likewise, the talents and dedication of our member volunteers and professional staff are primary contributors to achieving our mission. We will shift our organizational culture and talent development practices to increasingly incorporate client perspectives and develop a mindset that encourages understanding and taking appropriate risks, adapting from failures, and relentlessly improving to achieve results.


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Risk Profile The Board of Governors’ strategic direction for the organization is to focus and make incremental advancement of our mission and goals rather than to shift course or to significantly increase strategic risk though such initiatives as the development of new business lines or programs. The mission remains unchanged, and the strategy is designed to strengthen the CFA Program, purposefully move us forward in delivering greater value to members, and having a larger, more effective presence within the investment management industry.

Although the overall strategic risk profile of the organization is largely unchanged, there are various risks associated with specific proposed strategies, such as implementation risks with new technology platforms and potential financial, regulatory, and reputational risks around greater decentralization of local marketing and advocacy activities. A general discussion of these risks is included in the specific strategic function and regional strategy summaries. Management’s intention is to mitigate risks to be in alignment with the board-approved risk appetite statement. A comprehensive enterprise risk management program documents organizational risks, responsible parties, and mitigating actions taken to control risk exposure.

However, management is not promoting a risk-averse culture at CFA Institute. On the contrary, management is driving innovation and experimentation with greater risk awareness to accelerate the impact of our mission. Current examples include upcoming trials of different member dues rates, small marketing campaigns targeting specific lapsed candidate populations, and the application of human-centered design to improve the value of products and services. By taking smaller risks more often, required mitigations are likewise smaller and setbacks less damaging. This results in faster organizational learning while keeping the overall risk exposure at an acceptable level.


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FY2019 Global Goals and Objectives Summary

GOALS OBJECTIVES FY2016 BASELINE

FY2019 TARGETS

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Grow Global Relevance, Extend Local Reach

1.1 Increase core member market penetration 9% 10% 1.2 Increase the annual volume of professional CFA Program candidates employed in the core 63,800 76,600

1.3 Grow overall Investment Foundations Program candidate volume 4,500 14,500 1.4 Grow overall CIPM Program candidate volume 1,360 2,500 1.5 Increase candidate test center accessibility 47% 50% 1.6 Reduce CFA society membership gap 17% 10% 1.7 Increase CFA society partnership satisfaction 88% 90%

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Deliver Member Value

2.1 Increase CFA Institute membership Net Promoter Score3 +22 +50 2.2 Increase CFA society membership Net Promoter Score -6 +30 2.3 Increase global CFA Institute and CFA society membership retention 95% / 90% 95%

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Advance Professinalism and Professional Recognition

3.1 Secure credentialing program regulator waivers In Targeted Markets4 3.2 Increase CFA Institute membership support from top 100 global asset management firms 10 11

3.3 Increase CFA Institute unaided brand awareness 32% 54% 3.5 Increase member participation in voluntary Continuing Education (CE) Program reporting 71% 75%

3.6 Determine member support for a CE reporting requirement to maintain their professional credential Project Completed FY17

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Build Market Integrity that Benefits Society

4.1 Increase member satisfaction with advocacy efforts and impact 74% 80% 4.2 Achieve targeted advocacy engagements (position papers, meetings) with investment management-related regulators and standard setters

TBD

4.3 Achieve membership on and demonstrate relevant impact of targeted advocacy committees

30% ± 10% of Targeted Committees

4.4 Increase quality advocacy media volume associated with targeted advocacy and Future of Finance priorities 206 247

4.5 Increase GIPS Standards adoption of the top 100 global asset management firms; Increase AMC adoption of the top 100 global asset mgmt firms; Increase total overall number of AMC adoptions

74 24

1,200

80 50

1,600 4.6 Achieve regionally proportional case sourcing capabilities and mean case aging target for practitioner Professional Conduct (PC) cases 18 months 15 months

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Enhance Operational Excellence

5.1 Increase member satisfaction with digital experiences 66% 80% 5.2 Increase overall organizational efficiency 10% Improvement 5.3 Compliance with regulatory, tax, and appropriate public company standards Compliant

5.4 Maintain volunteer satisfaction rating 94% 94% 5.5 Board-approved CEO succession plan in place; CEO-approved succession plans for LT members in place; overall headcount managed within Board-approved limit

Planning Complete Staff Cap: 637

5.6 Maintenance of net contingency reserve balance 100% ± 20% of Operating Expenses

3 Net Promoter Score http://www.netpromoter.com/why-net-promoter/know for more information. 4 Germany, Spain, France, Italy, UAE, Luxembourg, Ukraine, India, China, Australia, and Chile


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Appendix

Strategy Execution Three strategic actions—developing future professionals, delivering member value, and building market integrity—will be the focus of the organization’s strategy execution. These actions will be supported by all CFA Institute staff, each applying their specific expertise to achieve the goals and objectives.

As shown on the following Organizing Framework illustration, the organization is structured into five strategic functions—Credentialing; Member Value; Advocacy; Research; and Ethics, Standards & Professional Conduct. These strategic functions primarily develop the products, services, and content offered to our members, candidates and other stakeholders.

The Relationship Management and Services Delivery functions, primarily organized through a regional structure, serve as the touchpoints with candidates, members, local societies, employers, regulators, educators and other stakeholders and are charged with bringing the portfolio of products and services to market and delivering on the mission regionally.

The Enabler and Internal Control functions manage corporate activities and support organizational capabilities essential to serve customers and advancing the mission.


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Strategic Actions

Developing Future Professionals FY2019 Objectives

Based on the goals in the FY2017–FY2019 strategic plan, the Credentialing strategic function in partnership with the regions, Relationship Management, Services Delivery and other functions will take the lead to achieve the following objectives by the end of FY2019:

1.1 Increase core member market penetration from 9% to at least 10%

1.2 Increase the annual volume of professional CFA Program candidates employed in the core to 76,600 (up 20% from the approximate 63,800 in FY2016)

1.3 Grow the Investment Foundations Program candidate volume to 14,500 administrations (up from 4,500 in FY2016)

1.4 Grow the CIPM Program candidate volume to 2,500 administrations (up from 1,360 in FY2016)

1.5 Increase candidate testing service accessibility from 47% to 50%

3.1 Secure credentialing program regulator waivers in targeted markets5

Analysis

The Credentialing function delivers education that develops professional competence—a quality that requires the application of technical knowledge in an ethical framework to guide investment decision making. Offering education programs that are relevant to local industry practices in a regionally balanced manner is critical to our continued success. Our formal education programs are evaluated relative to just-qualified candidates (rather than to pass rates, which are influenced by candidate preparation, candidate profiles, study tools, employer support, etc.), with a focus on measuring the outcomes that are likely to lead to raising standards in the investment management industry by employers, regulators, and others as well as an increase in our market penetration. Strategic Themes

The interconnected processes that distinguish our credentialing programs are: a theoretically sound and practically relevant investment management global body of

knowledge that informs world-class, custom curricula the ability to rigorously and reliably assess mastery of the associated competencies, which

provides a reliable signal of quality and qualifies talent

CFA Program

Protecting the rigor, relevance, quality, and resource commitment to the CFA Program is a defensive core strategy. That said, research indicates that a weakness of the CFA Program is the significant time and study commitment required from successful candidates and the crude learning experience.

5 Germany, Spain, France, Italy, UAE, Luxembourg, Ukraine, India, China, Australia, Chile


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We will look to increase the value proposition of all our programs by ensuring industry relevance (content and delivery), nurturing candidates through the discernment process, and improving the candidate learning experience. Strategic Vision: Improving practice analysis by widening the perspectives of stakeholders participating the

process, promoting the results of practice analysis beyond the CFA Program, and using the intelligence to inform other organizational initiatives, such as the professional agenda and professional education

Enhancing the candidate experience Building out a CFA Institute learning experience platform Increasing efficiency and scalability through technology, implementing item banking, and

exploring the application of artificial intelligence and computerized adaptive testing Future of Exam Delivery: Positioning the CFA Program as a pathway to and partial fulfilment

of a broad array of specialized learning programs.

Investment Foundations Program and CIPM Program

The Investment Foundations Program and CIPM Program will execute on their business plans to improve product positioning, target market, pricing, sales and marketing tactics, and user experience. Both require better exposure under the CFA Institute brand and a clear relationship to the CFA Program.

Influencing the Influencers through Stakeholder Value Proposition

We will increase our efforts with employers, regulators, universities, and societies to influence and encourage third-party champions of CFA Institute programs. Employers - Encourage employers to require the CFA designation when hiring investment

management decision makers, the CIPM certificate for those in investment portfolio evaluation, and the Investment Foundations certificate for others working in the investment management industry.

Regulators - Encourage Regulators to recognize the CFA Charter as fulfilling local licensing requirements.

Universities - Expand CFA Institute program curricula into academic curriculum that encourages students to enrol in the CFA Program and build a bridge that shepards students from university to industry.

Societies - Enhance CFA Institute society partnerships and support candidate membership, practice analysis assistance, candidate preparation activities, regulator recognition, employer adoption, and scholarships.

Risks As the primary source of revenue for the organization, the CFA Program is the least risk tolerant credentialing program because of the potential for litigation and reputational risk associated with the development and administration of our examinations. Because the greatest risk to the CFA Program is obsolescence, we will pursue continual improvement through strategic visioning in both the content and design of the CFA Program. There is, however, more willingness and ability to tolerate risk and


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experiment with the CIPM Program and the Investment Foundations Program because both programs have yet to achieve the status in their respective markets enjoyed by the CFA Program. We will therefore aggressively test market propositions with the principles of human-centered design.

Success Metrics Increase the core of employed CFA candidates to strengthen market penetration Grow the Investment Foundations Program and the CIPM Program Increase market value (employment rate, compensation level, type of job function) Increase candidate satisfaction Increase employer satisfaction (employer support) Increase regulatory recognition (weighted by core industry headcount)

Deliver Member Value FY2019 Objectives

Based on the goals in the FY2017–FY2019 strategic plan, the Member Value strategic function along with the Regions, Relationship Management, Services Delivery and other teams are targeting the following objectives by the end of FY2019.

1.1 Increase core member market penetration from 9% to 10%

1.6 Reduce the society membership gap from 17% to 10% at most

1.7 Increase society partnership satisfaction from 88% to at least 90%

2.1 Increase CFA Institute membership Net Promoter Score from +22 to at least +50

2.2 Increase CFA society membership Net Promoter Score from –6 to at least +30

2.3 Increase global CFA system membership retention to 95%

3.2 Increase CFA Institute membership support of top 100 global asset managers

3.3 Increase CFA Institute unaided brand awareness from 32% to 54%

3.5 Increase member participation in the voluntary continuing education reporting program from 71% to 75%

3.6 Determine member support for a continuing education reporting requirement to maintain their professional credential


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Analysis

Member Survey

From the Annual Member Survey, the member value proposition is clear and outlined in the following table (top four suggestions only). We have aligned our priorities accordingly.

Members Told Us What’s Important to Them What Our Member Value Proposition Offers

Find career opportunities Careers: Support career development

Create affiliation and networking opportunities Affiliation: Engage with peers to discuss issues of common interest

Promote the brand and raise charter recognition Recognition: Promote the value of and brand of the CFA charter and CIPM certificate

Provide more education content, courses, and training Education: Strengthen continuing education opportunities

At the same time, advancing ethics and standards in the industry is deemed by members as the most important priority for CFA Institute. Therefore, our efforts in these areas are also a significant, if less tangible, element of member value. Changing Behavior

Against a backdrop of behaviors and needs by members today, a number of new trends arise and are likely to accelerate further.

Diversity

Members express a wide range of needs that reflect the broad spectrum of their various roles. In recent years, the globalization of the membership, together with the growing complexity of investment management, has significantly increased the diversity of needs to be serviced in order for membership to be relevant.

Value

Member behavior is changing on several fronts. A consumerist attitude and greater price sensitivity, especially in lower-income countries, is leading to more demand for value for money. There seems to be a substantial gap between the perceived value of membership and its actual cost, which is much higher. This may be the result of two factors: Members may not realize the useful services that are available to them or members may value some but not all of what we currently provide.

Convenience

A faster-paced world leaves members time-poor, leading to a greater emphasis on the usefulness and immediacy of value provided. Meeting that need, new technology now allows much easier and convenient delivery of value. But that has also led to more competition for satisfying members’ needs and a higher expectation for the quality of the delivery solution.

Resources

CFA Institute lacks sufficient local presence, expertise, and staff to be able to attend to the many needs of a widely dispersed membership base. Quite simply, CFA Institute cannot do it all alone. Fortunately, we have a global network of local CFA societies. Importantly, most members do not care for the distinction between their CFA Institute and their local CFA society membership; they demand a single stream of value from the combined “CFA system.”


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Strategic Themes

The trends identified in our analysis point to the need for several strategic responses.

Personalize Member Value and Its Delivery

The wide variation in the needs of members can only be met with greater personalization of service. Otherwise, the value provided will not be perceived as useful and disengagement will follow. In general, the ability to select components of value based on personal needs and preferences is the best way to address diverse member needs and deliver value.

Place Continuing Education at the Center of Member Value

Good strategy amplifies natural strengths in the pursuit of an objective. And what is our greatest strength? Education. We have significant expertise in compiling investment knowledge and then conveying and testing it. We have a strong brand association with that capability, accompanied by consumer trust. And we have the potential for scale and reach with few rivals. In addition, even as members demand career support, networking opportunities, and promotion of the charter, the best return on investment from membership is advancing competence within their profession. We should therefore apply our efforts and resources to improving the opportunities for continuing education.

Apply Technology to “Push” Relevant Value According to Preferences

Personalizing member value that results in greater engagement will be achieved by a more intensive use of new technologies. The Digital Core Transformation project is therefore critical to support this aim. Tighter system integration, a content management system with a structured taxonomy for tagging and retrieving objects, member profiles that are built for preferences, relevant value pushed through an app, easier online self-service, and so on are all technological opportunities. In other words, an interactive, engaging, and value-driven online experience is necessary to personalize the member experience and Member Value. The strategy for Member Value rests substantially on our ability to design and deliver a technology solution.

Partner with CFA Societies and Others to Create More Member Value

CFA Institute resources are not sufficient to attend to all of our members’ needs. We also do not have in-house expertise across all topics of interest. As such, partnerships can extend our reach and channel more value to members. CFA societies provide a perfect complement to CFA Institute capabilities. In addition, an emphasis on outsourcing, collaborating, and soliciting user-generated content would better leverage the community around us to serve our members.

Imagine a member requesting to be alerted when there is a job opportunity in Sydney; to be notified whenever Aswath Damodaran speaks at a conference; or to receive a link to blog posts on bitcoin. We could similarly send alerts about education programs.


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The Member Value strategy is summarized in the following graphic.

Risks

The Member Value strategy will address the following significant risks: Declining activation and retention rates. If we do not provide relevant value, members will

choose not to be affiliated with CFA Institute, thereby putting at risk our mission to become the professional body for investment management practitioners.

Low levels of penetration, especially in low-income countries and territories. Annual dues are high in purchasing power parity terms for members in low-income countries and territories. At the same time, locally provided member value may be relatively low as CFA societies are still becoming established. Therefore, many young professionals may choose not to become or remain members. If this happens on a significant scale, especially in China and India, then our aspiration of 100% market penetration globally would be at risk.

Members do not remain current in their expertise. The rapidly expanding body of knowledge in investment management requires practitioners to invest in continuing education. Our members look to us to provide relevant learning opportunities. Failing to do so would put at risk the professionalism of our members and potentially the welfare of investors.


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Building the required IT platform proves too complex. The strategy depends critically on the use of technology to provide a personalized package of member value to address the diversity of needs among our members.

Membership remains of limited relevance beyond the use of the CFA designation. Our attempts at providing more relevant education and personalized delivery fails to engage our busy members any more than at present.

The gap between perceived value and actual cost of member benefits remains high. We fail to raise perceptions of value substantially.

Insufficient integration of value generated by CFA Institute and CFA societies. The two streams of member value remain weakly connected, resulting in a poor member experience.

Success Metrics

Increase core membership market penetration Increase member value and retention Reduce society membership gap Increase brand awareness Increase employer membership support Increase member participation in the voluntary continuing education program

Build Market Integrity FY2019 Objectives

Based on the goals in the FY2017–FY2019 strategic plan, the Advocacy; Research; Ethics, Standards, and Professional Conduct strategic functions will take the lead to achieve the following objectives by the end of FY2019.

4.1 Increase member satisfaction with advocacy impact from 55% to 70%

4.2 Achieve targeted advocacy engagements (position papers, meetings) with investment management–related regulators and standard setters

4.3 Achieve membership on and demonstrate relevant impact of targeted advocacy committees

4.4 Increase quality of advocacy media volume associated with targeted advocacy and Future of Finance priorities by 20%

4.5 Increase GIPS registrations from 74 to 80+ of the top 100 global asset managers; increase AMC adoptions from 24 to 50+ of the top 100 global asset managers and from 1,200 to 1,600 firms overall

4.6 Achieve regionally proportional case-sourcing capabilities and mean case aging of at most 18 months for practitioner professional conduct (PC) cases


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Analysis

Investor Protection

Our work and outreach is focused on investment management–related issues directly connected with protecting investors in both the instruments they invest in and products and services they utilize. This has both global and local implications for our work and includes local regulatory debates on the rules of the road for the investment industry by jurisdiction. Regulatory consultations, outreach to regulators and standard setters, and participation on key investor advisory committees are the main areas of our influence. In Washington, DC, an intensely political and highly financed environment presents specific challenges. Regionally, emerging markets present a unique challenge in monitoring, local laws, and language, a responsibility that lies primarily with local societies. Our support in emerging markets can be increased and remain focused on one-off opportunities with societies. Market Transparency and Fairness

Our work and outreach is focused on issues directly connected to regulating investment markets and investment products and services that are fair, fully disclosed, and transparent for all market participants. This element of the strategy has both global and local implications for the work of Standards & Advocacy and primarily centers on regulatory debates and the rules that govern securities exchanges, financial reporting, corporate disclosures, and related technological advances. Regulatory consultations, outreach to key regulators and standard setters, and participation on key investor advisory committees focused on investment management–related topics are the main areas of our influence. In addition, properly timed thought leadership white papers that anticipate regulatory debates and feature new thinking and investor perspectives on investment management–related topics are highly regarded and encouraged by many standard setters. Recent examples include papers on shadow banking, bank impairment practices, and the effects of high-frequency trading on liquidity. In the next three years, key challenges include the escalating politics of cross-border markets and participants; market technology and infrastructure issues, such as bond market structure and liquidity; and supporting emerging market societies on local issues. Brussels Office

The Brussels office will continue to build relationships with key regulators and work toward establishing CFA Institute as an important voice in the regulatory agenda related to investment management and market integrity matters. The activity will focus on European Commission initiatives and assisting local societies in understanding and commenting on the implementation phase of such initiatives at the local level. Ethical and Professional Practice

Our work and outreach is focused on issues directly connected to creating, maintaining, and advancing best practices and codes and standards designed to improve the integrity and professionalism of investment management practitioners. These principles are foundational to the professionalism agenda. In the next three years, challenges include ensuring adequate promotional and sales resources for the Ethical Decision Making (EDM) product, extending the adoption of the GIPS standards and the AMC, having better data on firms claiming compliance with the GIPS standards and


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the AMC, and creating a stronger connection and brand association of the GIPS standards with CFA Institute. Strategic Themes

The opportunity in the Advocacy, Research, Ethics, Standards & Professional Conduct areas are to aggressively and more effectively promote awareness and recognition of our content and ensure a focus on powerful and member-relevant debates and tools. Specific examples include industry-targeted research aided by our proprietary database of members, exceptional ethics training tools, and staying ahead of industry and profession mega-trends via our Future of Finance (FoF) initiative. Our objective is to reach the broader investment management industry, its many stakeholders and service providers, regulators, and key media outlets to fully feature the CFA Institute community as a “go-to” destination for investment industry thought leadership and advocacy.

Shaping the investment management environment will require that we are more broadly and consistently recognized by industry participants as one of the most authoritative sources on the future direction of investor protection, market fairness and transparency, and professionalism.

As a result of our analysis, a number of trends have been identified that require a strategic response from CFA Institute. Increase Member Satisfaction with Advocacy Focus and Impact

Advancing ethics and standards in the industry was deemed by members as the most important priority for CFA Institute in our last annual member survey. As such, the Standards & Advocacy function will ensure that topics and content align with member needs and contribute to member value. We will focus on better assessment and selection of content that is relevant to members and devise methods to enhance our communications efforts about our advocacy impact. Examples of regionally relevant advocacy topics include the following. AMER: Investor protection regulations and debates; market structure and integrity issues;

fiduciary duties for investment advisers, financial reporting transparency, and bond market structure

APAC: IPOs, market manipulation, and mis-selling; country-level examination of rules and policies, emerging market issues, and shadow banking issues

EMEA: MiFID (Markets in Financial Instruments Directive) and UCITS (undertakings for the collective investment in transferable securities) in refinements, systemic risk issues, Capital Markets Union initiative, ban on sales inducements on investment products, and bond market structure

Align Branding and Promote Codes and Standards Adoption

Our key focus here remains keeping the globally recognized standards, such as the GIPS standards, strongly supported and maintaining the well-developed standard-setting process to maintain its relevance and credibility. The AMC is continuing to build momentum with key investment management firms and asset owners requesting managers they hire to be compliant. Another focus will be to further advance the new online EDM course. We are currently developing individual marketing and promotional plans for the GIPS standards, the AMC, and the EDM course to improve uptake and enhance our global branding campaign. Greater adoptions of such codes by the industry, increased


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asset owner demand for compliance, and greater support of regional regulators interested in enforcing claims of compliance are all areas of focus for our three-year plan. Integrate Future of Finance Themes into All Standards & Advocacy Core Principles

The FoF initiative helps advance and promote thought-leadership efforts and other advocacy content tools to the investment industry. The FoF initiative will explore the standing of the investment management profession generally and across different markets to identify and ultimately focus on key industry trends and developments that will potentially change the nature and operation of the investment management profession as well as matters that threaten the integrity of investment services being offered worldwide. In addition, nearly all of the CFA Institute content created—credentialing programs, member education, and global and local advocacy efforts—is designed to improve investor confidence, industry credibility, and client trust for the finance industry of the future. This organization-wide effort falls under an FoF umbrella. Extend Partnership with Societies to Further Extend Advocacy Efforts into Local Markets

Advocacy efforts must be consistent and prominently deliver content and commentary. Assessments must take place to evaluate if messages are being heard, if the voice is recognized as thought leader, and if efforts are creating a positive impact on the industry and its practitioners. CFA Institute has an enormous advantage in that its brand and work can be supported by a network of nearly 150 societies. These local groups are the key to broad global recognition and impact. Training and finding local members with expertise is important to a successful outcome. Standards & Advocacy will advance these partnerships with additional resources, support, and assistance in both promoting CFA Institute content and helping local societies develop locally.

Risks

The biggest risk to an effective advocacy program is increasing member and stakeholder awareness of the outputs. As we build awareness of our brand, advance our mission, and inform members of our activities, value and satisfaction with our efforts will be recognized through: Better communication and promotion of outputs. Strong alignment with the new CFA Institute branding initiatives. Effective use of industry partnerships. Effective society engagement and participation.

A secondary risk around our advocacy programs is the possibility that our content or commentary creates harm to our business plans in any jurisdiction. A miscalculation of tone and political sensitivity can seriously disrupt the ability to do business in a jurisdiction or otherwise limit a broader CFA Institute opportunity.

Success Metrics

Increase Member satisfaction with advocacy impact Higher adoption of Code and Standards


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More invitations to join targeted regulatory committees Higher rate of policies incorporated into legislation by targeted committees Increased citations of CFA Institute advocacy positions in scholarly publications More media coverage, both earned and placed. Increased advocacy content consumed (downloads, social media impressions) More local society advocacy initiatives and training activities

Regions

Americas (AMER)

Analysis

The region consists of 40+ countries and territories, 980 million people, and more than $41 trillion in assets under management (AUM), representing 54% of global AUM.6 The region includes an investment management industry work force of about 493,000 (or 41% of the global investment industry work force), with approximately 328,000 in the “core” market for CFA Institute.7 Within the region, the United States is the clear powerhouse, with AUM more than 35 times larger than the second largest regional market, Canada.

Even with this existing foundational strength in the region, the client base is predicted to grow tremendously over the next 5 to 10 years.

One billion middle-class consumers will emerge globally. o Affluent wealth8 growth in North America will be 4.9% (from $13.7 trillion to $20.1

trillion, 2012–2020) o Annual growth in Latin America is expected to be 10.1% (from $2.1 trillion to $4.5

trillion, 2012–2020)9 High-net-worth (HNW) investor10 assets in North America are predicted to grow by 4.4%

annually (from $21.7 trillion to $30.6 trillion, 2012–2020) HNW investor assets in Latin America are predicted to grow by 9.0% annually (from $0.9

trillion to $1.9 trillion, 2012–2020). Total AUM for North America and Latin America are projected to be $56.1 trillion (2020). Latin America is projected to experience annual growth in AUM of 12.5% between 2012 and

2020.

The need for a strong and trustworthy investment management profession in the region will be even more important over the next few years.

Strategic Themes

As a result of our analysis, a number of trends have been identified that require a strategic response from CFA Institute.

6World Bank (2014). 7Mercer, “Mercer Market Sizing Report” (30 September 2015). 8Mass affluent wealth is defined as individuals who have $100,000 to $1,000,000 in investable assets. 9“Mercer Market Sizing Report” (30 September 2015). 10High-net-worth investors are individuals with more than $1,000,000 in investable assets.


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Promote Private Wealth Management

Within North America, CFA Institute membership has shifted from an almost exclusively institutional base to having a significant portion of members practicing in private wealth management. Based on the 2017 Annual Member Survey, 40% of members indicate that they are managing private assets with 41% of that population in a client-facing/financial planning role. The majority of members managing private assets report an average client size of $1M - $30M. Yet, the value of the charter, the organization’s high educational standards, and the ethical code attached to the charter are virtually unknown among HNW investors. As a result, we are promoting CFA charterholders as the go-to private wealth managers to HNW investors within North America.

Use Influence to Build a Trustworthy and Competent Profession

The public continues to behave in a way that signifies it’s distrust of the financial services sector. We are rebuilding that trust by becoming the professional body for the industry and ushering in a public warranty through (i) amplifying our voice on targeted regulator and advocacy work and (ii) strategically engaging the C-Suite and industry influencers. This regional strategy element will build upon our existing regulatory and advocacy work and provide higher-level platforms to influence broader audiences, more deeply. To add to our ability to influence and build the profession, we will also strategically target the C-suite of key firms. Historically, our employer outreach has been focused on transactional interaction with mid-level management. This strategic shift will refocus our efforts from transactional to transformational with the key influencers, the C-Suite, with the goal of establishing long-term, more substantive relationships with the C-Suite in North America.

Empower Societies

The Americas region is supported by a network of 89 CFA Institute member societies. Greater investment in societies, which began in FY2015–FY2016, is helping to equip and empower them to act strategically, to advance the profession, to propagate CFA Institute messages, and to deliver local member services. We are bringing to bear all of the resources, including in-kind, to help societies impact, shape and create more relevancy, particularly in strategic markets or centers of influence. As a result, societies will be better equipped to deliver member value and advance the profession in their local communities.

Extent Local Reach in Brazil and Mexico

Although the United States is the powerhouse of the region, future growth is expected to be strongest in Latin America, albeit smaller than other regional markets in absolute numbers. Given the state of the emerging markets and projected growth in Latin America, there is an opportunity to shape the profession and increase the demand for our professionalism agenda with influencers in developing economies in Latin America and specifically in Brazil and Mexico.

One Relationship Management and COIs

We are committed to a coordinated relationship management philosophy through which we will execute on our strategy. The primary purpose of the philosophy is to be more client-centric and create a better client experience for all of our partners and stakeholders. We have shifted our operating model from 4 independent relationship management functions into cohesive teams that will work together to deliver market-based goals.


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We have designated nine key strategic markets or centers of influence (COI). These are areas with intense concentrations of investment professionals and firms. With the identification of these COIs comes the ability to provide better coordination and transparency around our relationship management activities. Within each COI, we have identified market teams accountable for developing and executing on market strategies in partnership with society leadership.

Risks

The following risks have been identified in the legal, compliance, operational, reputational, and financial areas for the Americas region: Operational risk: The ability to establish relevancy for CFA Institute and the CFA charter in

the noisy and rapidly changing wealth management industry. Operational risk: Maintaining a relevant rhythm of interaction and content with the C-suite.

Compliance risk: With our expansion into new Latin American markets, there is the possibility of failing to comply with legal requirements associated with increased operations/presence in Brazil and Mexico.

Operational risk: The demands of servicing 89 societies with increasing demands may outpace our regional team capacity.

CFA society risk: When we fail to effectively deliver and/or communicate a society-servicing model for the region, small- to medium-size societies become disenfranchised because of perceived “lesser” support from CFA Institute.

Market risk: If we fail to navigate the economic/political climates in Brazil and Mexico, we may face obstacles that cannot easily be overcome.

Reputational risk: When we represent the interests of investors, we cannot push the advocacy too far and become subject to bad press and/or backlash from our membership.

Success Metrics:

• Increase brand awareness among HNWI • Increase core membership market penetration • Increase society membership NPS • Reduce society membership gap • Increase society satisfaction • Increase AMC adoptions among Top 100

Asia Pacific (APAC) Analysis

Fastest growing region of CFA candidates, up 12% YOY FY16 compared with FY15 Largest pool of candidates globally, 46% of total at FY16, expected to be 48% in FY17 High number of charterpending candidates in key markets: China 124% and India 226% Low penetration in the ‘core’ in Asia Pacific is 6% 100% participation in global passport program

Strategic Themes


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Public Awareness

We operate in a widely diverse region in terms of market sophistication and geopolitical maturity. In some markets, large gaps exist amongst recognition, awareness, even knowledge of the CFA charter, CFA Institute, and our mission. In China, for example, we are widely recognized as the ‘gold standard’ credential and for ethics and integrity. In India, on the other hand, the general public and employers need to be educated altogether about what the CFA charter stands for. In all markets we have work to do to create awareness and interest in our activities beyond administering the CFA exam.

Regional Relevance

As the growth driver of CFA Program candidates – led predominantly by growth in China and India – Asia Pacific plays an important role to the organization’s revenue generation and global footprint of candidates, members, and stakeholders.

In many, if not all markets in Asia Pacific, we have a unique opportunity to be part of financial market development, contribute to the professional standards of the financial services industry, and be a resource to regulators about investor education and policy-making.

As a region, we are closely tied to CFA Institute headquarters where three strategic functions – Credentialing, Member Value and Standards & Advocacy – provide and deploy products, services, and initiatives that we adapt to fit regional needs. We also initiate new projects designed to serve and grow our member base in the region.

Market Segmentation

Our ability to increase penetration of CFA charterholders in the ‘core’ , raise awareness with employers about the benefit of hiring CFA charterholders, and demonstrate the value to members of belonging to a local, regional and global community, is critical to sustaining and increasing member growth and market awareness of the CFA charter.

We are analysing our markets across dozens of criteria and assessing country-level requirements. We are reviewing the capacity of CFA Institute resources and CFA society capabilities and considering segmenting stakeholder groups with similar needs. The presence of a regional financial center and the potential to influence investment industry practices and economic development at the country level is also factoring into our analysis.

Lapsed Members and Candidate Conversions

The global reputation of the CFA charter means that candidates see the CFA program as a means to an end. At the same time, the investment management industry (specifically ‘core’ employers defined as asset managers and asset owners), is small and in some markets a majority of investment professionals are not charterholders, thus employers do not have an appreciation for what CFA candidates learn in the program. Together, there are an increasing number of candidates who have passed Level III but are not (yet) employed in roles that lead to earning the CFA charter. Such charterpending candidates look to CFA Institute and local societies to provide connections with employers and recruiters, industry networking opportunities, and increasingly, soft skills training.

Membership to both CFA Institute and a local society is costly, given the pricing parity of the region. As such, maintaining and promoting differential membership pricing, amplifying the value of the Global Passport Program, and effectively re-engaging with lapsed members is a vital function of our region.


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Risks

Reputational risk: Asia Pacific produces a high number of candidates (supply) where there isn’t proportional employment opportunities (demand). Employing charterpending candidates in India and China is a top priority. To an extent, the definition of ‘core’ limits market penetration opportunities in countries like India and China.

Regulatory risk: In our largest regional market of candidates, we are entirely dependent on regulatory approval for exam administration. In all markets, regulatory recognition is a critical element to employer support for CFA charterholders and program candidates.

Market value risk: Since there are no barriers of entry for investment management professionals to practice, the industry’s ability to promote the CFA designation has limitations. Maintaining the relevance of the credential is vital and must include regional input into the Practice Analysis process and continuing education requirements. C-suite engagement is dependent on both perceived and actual value of the CFA designation.

Concentration Risk in China: CFA Institute needs to ensure Chinese growth momentum within mainland China and around the world is sustainable, while not becoming over reliant on China to the detriment of other markets.

CFA Society risk: We continually work to strike the right balance between what we do for societies and what we support societies in doing. As independent organizations run by volunteers, member engagement, member satisfaction, member retention, candidate and lapsed member conversion are all in large part dependent on society leadership. Our long-term success will be determined by our ability to lead by example, align the society’s vision with our own, and improve their delivery capability.

Technology risk: Advancement of new technology applications within the investment industry will change the skills and competency requirements for investment professionals. How the CFA Program will evolve along side such industry practices could have a significant impact on the value of the charter and to the CFA program as a whole.

Success Metrics

Increase core membership market penetration Increase member value and retention Reduce society membership gap Increase brand awareness Increase employer membership support More media coverage, both earned and placed

Europe, Middle East, and Africa (EMEA) Analysis

The EMEA region is very broad and comprised of sub regions (i.e., Europe, Middle East, and Africa) that are very distinct and need their own sub regional strategies. The development of these


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strategies is underway and the following discussion touches on a few of the significant themes and planned actions in the region. Membership in the EMEA region is highly skewed towards the three XL society areas (United Kingdom, Switzerland and Germany) which account for more than 50% of the EMEA membership base. While the EMEA team will not downplay the importance of other EMEA Member Societies, there would always need to be a focus on these large areas of membership concentration. While brand awareness in the United Kingdom and western Europe is extremely strong, it is otherwise patchy across Central Europe, the Middle East, and Africa. Routes to market differ widely but play to the organization’s functional strengths of developing professional standards, financial & ethical literacy, and market structures that are in all stages of development. The economic and regulatory backdrops in Europe, along with the economic backdrop in the Middle East and Central/ Eastern Europe are a challenge and have resulted in slowing candidate numbers, growth is still growing the overall membership base in the region.

Strategic Themes

Promote Developing Markets

While the majority of members is concentrated in Western Europe, economic growth and favorable demographics points to significant opportunity in developing markets. Establishing a sub-regional presence (initially through a Middle-East office and subsequently via a comprehensive African strategy) is an important first steps to developing the relationships necessary to capitalize on these opportunities.

Enhance Share of Voice in Established Markets

Establishing a value proposition and growing member value in Europe is important to growing and sustaining member engagement. Strengthen Partnership with Socities

Though not poor to begin with, the relationships between CFA Institute and EMEA member societies needs to be further strengthened and professionalized with the long-term goal of partnering with member societies to promote the strategic shift from membership institution to professional body. This effort will require resources, training and engagement from planning through to execution to be successful.

Deeper Engagement in Key Regulatory Debates

Advocacy staff in the EMEA region are top quality and have established a good reputation that can be further leveraged into discussions around Brexit, market structure and EU investment management industry regulations. Continued partnership with societies in this area are essential to maximize impact.

Risks

Brexit: An immediate risk in the region is the potential impact of Brexit on candidate growth and ultimately where the investment management industry settles post-Brexit. Current


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candidate demand is uneven and with substantial volatility in recent years makes direct attribution to Brexit difficult. However, demand dislocation is expected as the industry responds to the Brexit situation. CFA Institute needs to work with members and issues on all sides of the Brexit debate as was reflected in the recent Brexit report.

Staff Resources: Within the region, there are currently 3 staff supporting 40 societies with an additional 10 new societies forming over the next 2 years. New markets such as Iran and extending operations into new locations such as the UAE will further stretch staff and adds operational risk. A new regional Chief Operations Officer has been hired and internal restructuring will help to address some of these risks.

Success Metrics

Increase core membership market penetration Increase member value and retention Reduce society membership gap Increase brand awareness Increase employer membership support

Organizational Capabilities and Infrastructure FY2019 Objectives

5.1 Increase member satisfaction with digital experiences from 66% to 80%

5.2 Implement the Digital Core Transformation and other inititaives to support 10% cost efficiency improvement

5.3 Compliance with regulatory, tax, and appropriate public company standards 5.4 Maintenance of 94% volunteer satisfaction rating

5.5 Board-approved CEO succession plan in place; CEO-approved succession plans for Leadership Team members in place; overall headcount managed within board-approved limit

5.6 Maintenance of net contingency reserve balance to 100% (+- 20%) of targeted level with excess principle and earnings supporting mission goals

Relationship Management Relationship Management functions facilitate relelationships with key stakeholders including local member societies, industry firms, regulators and universities to support regional market and product strategies. These functional teams largely operate regionally and support the objectives summarized earlier in this plan. Relationships Management treams are moving towards a more unified servicing model that allows the unique and interrelated stakeholders needs to be met more efficienctly within a given market. Specifically regarding engagement with investment industry firms, a focus on C-suite engagement to generate mission alignment will drive outreach activities rather than a focus on promoting specific products within firms. Government and Regulator Relations is focused on securing regulator recognition of Charterholders and the CFA Program. University Relations is focused on connecting students to a career in the Investment Management profession and leverages the Research Challenge to that end.

Society Relations supports the wider network of local societies and has a current focus on joint planning, society funding, training, and rollout of supporting technologies such as Member Nation.


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Services Delivery Services Delivery functions provide brand development, marketing, communications, customer care and content production services to the organization and society community. These teams largely operate regionally and support the strategic action objectives summarized earlier in this plan. Services Delivery leads global brand campaign and local society activation initiatives to build client awareness of the CFA Charter for members in both the institutional and private wealth spaces. A reimagined Customer Care model unifies customer support activities across communication channels, the web and social/mobile platforms.

People As the organization grows into new markets and processes mature, improved global talent acquisition and integration actions become increasingly important to ensure that the right people with the right skills are placed in the right job at the right time. To address flat overall headcount targets while continuing to develop leadership potential, internal talent development and talent movement initiatives will take place to ensure that necessary positions are filled by qualified candidates, nonperformance is addressed, and all staff have development opportunities. Importantly, succession planning for the CEO and Leadership Team positions will be completed to ensure that there is an adequate “bench” of ready leaders to advance the organization going forward.

Process Global Strategic Design capabilities in Design Thinking, Project Management, Learning Experience, Customer Experience and Business Process Management will help us to do the right things, the right way. We are geared towards using human-centered solutions to solve our challenges and opportunities. And for those processes already established, we will identify efficiencies through improved business processes and operations. These are core organizational capabilities enabling the organization to move towards the FY2019 10% efficiency target.

Technology Technology is vital to strategy execution. It is the digital nervous system that allows us to run. We will deliver technology that connects people (our members, societies and stakeholders) and delivers information. Several focus areas will realize this vision over the next two years. The Digital Core Transformation (DCT) initiative will form the infrastructure and backbone that will improve user experiences, streamline processes and ensure we have a modern technology platform. Member App and MemberNation will be fully built out to connect members to each other and allow societies to deliver our value to members. These technologies will be leveraged to create more personalized, frictionless experiences and improve access to continued eduction; so that members feel they have “one click, one CFA experience.” We will enhance candidates experience through online learning platforms and the initial stages of FED. We will help deliver improved analytics and reporting through our Finance 2.0 program and a build out of a more robust analytics platform. Lastly, investments must be made to ensure that technology performance and information security are adequate to protect the brand and business operations.

Financial Management Given the shift towards a regional operating model and complexities resulting from legal entity structure and multi-juristictional operations, the core financial management processes and systems must be enhanced. This Finance 2.0 initiative will reduce risk, create cost efficiencies for the organization and support the mission through improved performance reporting and decision-support capabilities. To protect the organization from market shocks, business disruptions, and other


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unforeseen events, financial contingency reserves will be primarily managed in a manner that protects long-term member value while also generating returns that can be used to fund initiatives that advance the mission.

Governance, Compliance, Risk and Ethics Growing the maturity of organizational capabilities requires enhancements to corporate governance and delegation of authority in order to meet appropriate not-for-profit and public company standards. Ethics and Compliance activities will focus on accomplishing tasks required by the US Federal Sentencing Guidelines while an environmental, social, and governance program will be established to improve corporate citizenship. Integrated (strategic and operational) risk management and crisis management will result in more purposefully managing risks and unforeseen crisis events effectively. The level of risk with which the organization is comfortable is guided in large part by the board-approved risk appetite. Risk analysis and alignment with the risk appetite is a critical component of operational planning, and execution and specific activities proposed to advance this strategic plan will include a risk assessment by business owners. This risk assessment will include appropriate mitigation steps to maintain alignment with the organizational risk appetite and an overall view of the investment (resources and assets put at risk) and expected return (mission, financial or otherwise) for the initiative that would include a range of possible outcomes and their associated likelihood. Also included in this assessment will be a quantified minimum acceptable return for continuance and planned actions to be taken if that hurdle is not yet met.


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