CFA Institute Recognizes May as ‘Putting Investors First’ Month

Global association leads movement of trusted investment professionals that put investor interests first.

CFA Institute, the global association of investment professionals that sets the standard for professional excellence, will recognize May as Putting Investors First Month. This marks the second year of this annual awareness campaign and builds on the success of May 2014, when activities took place in 58 cities globally by member societies representing more than 60,000 investment professionals. The initiative aims to unite investment professionals in a commitment to place investor interests above all others.

Throughout the month, many of the organization’s 144 member societies worldwide will host local events and call attention to the needs and rights of investors by endorsing the Statement of Investor Rights, a list of ten rights that any investor should expect from financial service providers.

CFA Society Philippines will host the Philippine Retail Conference 2015 on May 16, 2015 at the SMX Taguig Convention Center. This conference, which provides education to over 600 retail investors is in collaboration with the Central Bank of the Philippines, Securities and Exchange Commission, Department of Trade and Industry, ABS-CBN News Channel, The Global Filipino Investors, Fund Managers Association of the Philippines, Trust Officers Association of the Philippines, Money Market Association of the Philippines, Asian Institute of Management, and Ateneo de Manila University.

April Tan, president of CFA Society Philippines said that, “The conference aims to increase the financial knowledge of individual Filipino investors in today’s dynamic market. With the theme ‘Secure Your Future Now,’ the conference will highlight the key principles and practices that will help individual investors reach their retirement goals.”

“Investors, however, commit one or more common investor mistake, wherein one individual often proves to be their own enemy which may lead to dramatic impact on overall returns. We would like to address this issue, and many more, on the upcoming financial conference,” Tan adds.

As part of Putting Investors First campaign, CFA Institute has listed down 12 common mistakes investors make. The association warns individual investors to be cautious of their investment decisions to avoid these seemingly simple yet impactful missteps.

  1. No investment strategy

Every investor should form an investment strategy that serves as a framework to guide future decisions. A well-planned strategy takes into account several important factors, including time horizon, tolerance for risk, amount of investable assets, and planned future contributions.

  1. Invest individual stocks instead of a diversified portfolio of securities

Investing in an individual stock increases risk versus investing in an already-diversified mutual fund or index fund. Investors should maintain a broadly diversified portfolio incorporating different asset classes and investment styles. Failing to diversify leaves individuals vulnerable to fluctuations in a particular security or sector.

  1. Investing in stocks instead of in companies

Investing is not gambling and shouldn’t be treated as a hit-or-miss proposition potential. Analyze the fundamentals of the company and industry, not day-to-day shifts in stock price.

  1. Buying High

The fundamental principle of investing is buy low and sell high. Others at risk for “buying high” are those who follow investment fads, buying the “popular” stocks of the day. Typically, these investments become fashionable for brief periods, leading many to invest at the height of a cycle or trend—just in time to ride it downward.

  1. Selling Low

The flip side of the buy-high-sell-low mistake can be just as costly. Keep in mind that not every investment will increase in value and that even professional investors have difficulty beating the S&P 500 index in a given year. Always have a stop-loss order on a stock. It’s far better to take the loss and redeploy the assets toward a more promising investment.

  1. Churning your investments

Too-frequent trading cuts into investment returns more than anything else. A study by two professors at the University of California at Davis examined the stock portfolios. The study found that, without transaction costs, these investors received a 17.7% annualized return, which was 0.6% per year better than the stock market itself. But, after transaction costs were included, investors’ returns dropped to 15.3% per year, or 1.8% per year below the market. Again, the solution is a long-term buy-and-hold strategy, rather than an active trading approach.

  1. Acting on “tips” and “soundbites”

Listening to the media for their sole source of investment thinking rather than pursuing a professional relationship with an advisor is a far too common investor mistake. While breaking news and “insider tips” may seem like a promising way to give your portfolio a quick boost, always remember you are investing against professionals who have access to teams of research analysts.

  1. Paying too much in fees and commissions

Incredibly, investors are often hard-pressed to cite specifics on the fee structure employed by their investment service provider, including management fees and transactions costs. Investors should, as a precondition to opening an account, make sure they are fully informed as to the associated expenses that accompany every potential investment decision.

  1. Decision-making by tax avoidance

While individuals should be aware of the tax implications of their actions, the first objective should always be to make the fundamentally sound investment decision. Some investors, rather than pay a large capital gains tax, will allow the value of shares in a well-performing stock to grow so large it accounts for an inordinate percentage of their overall portfolio.

  1. Unrealistic expectations

It is important to take a long-term view of investing and not allow external factors cloud actions and cause you to make a sudden and significant change in strategy. Comparing the performance of your portfolio with relevant benchmark indexes can help an individual develop realistic expectations.

  1. Neglect

Individuals often fail to begin an investment program simply because they lack basic knowledge of where or how to start. Likewise, periods of inactivity are frequently the result of discouragement over previous investment losses or negative growth in the equities markets.

  1. Not knowing your real tolerance for risk

Keep in mind that there is no such thing as risk-free investing. Determining your appetite for risk involves measuring the potential impact of a real dollar loss of assets on both your portfolio and your psyche. In general, individuals planning for long-term goals should be willing to assume more risk in exchange for the possibility of greater rewards. However, don’t wait until a sudden or near-term drop in the value of your assets to conduct an evaluation of your level of tolerance for risk.

“We aspire to build and lead the investment management profession. To do this, we must continue to stand together for what is right, and in investors’ best interests. All investors have the right to be served by professionals who act as stewards of their savings,” said Paul Smith, CFA, president and CEO of CFA Institute.

Smith added that, “By supporting Putting Investors First Month, we want to inspire our community to make real impact and foster a market environment where investors can thrive.”

About CFA Institute

CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion for ethical behavior in investment markets and a respected source of knowledge in the global financial community. The end goal is to create an environment where investors’ interests come first, markets function at their best, and economies grow. CFA Institute has more than 129,000 members, including 122,000 CFA charterholders, in 145 countries and territories and 144 member societies. For more information, visit

About Putting Investors First Month: May 2015

Putting Investors First Month is a global initiative created to encourage financial professionals to place the interests of investors above their own, and build awareness of the duty to protect investor interests. The event is presented as a collaborative effort by societies of CFA Institute, the global association of investment professionals that sets the standard for professional excellence and credentials. Putting Investors First Month is part of the Future of Finance project, a long-term global effort to shape a trustworthy, forward-thinking financial industry that better serves society.





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