June 2016

CFALA e-Newsletter: June 2016

Welcome to the CFALA e-newsletter, a periodic publication with stories about noteworthy events and programs sponsored or hosted by the society, guest articles by members, book reviews, and other items of interest to CFALA members. Click on the headlines below to read the full stories. And if you’d like to contribute a story suggestion or, even better, write an article, we’d love to hear from you. Please email Executive Director Laura Carney at laura@cfala.org.

*Please note that the content of this e-newsletter should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of  CFA Society Los Angeles.

In this issue ...

Ethics - Generational Differences

“Both ageing populations and the new generation entering the workplace are creating new opportunities and challenges for employers, especially in relation to embedding business ethics.  For this reason, understanding the different characteristics of the generations is fundamental in building a culture founded on ethical values.” - Institute of Business Ethics [i]

To set the stage for comparisons, there are four generations identified in the working population described as follows:

  • Traditionalists       (born between 1922 and 1945 – ages 71 to 94)
  • Baby Boomers      (born between 1946 and 1964 – ages 52 to 70)
  • Generation X        (born between 1965 and 1982 – ages 34 to 51)
  • Millennials            (born between 1983 and 2004 – ages 12 to 33)

Some of the key points emerging from the comparisons of different perspectives of these groups and their dynamic in the workplace have significant implications for the future and how we might improve our approaches to managing them going forward:

  • Millennials account for 25% of the workforce in the US and it is predicted that by 2020, they will form 50% of the global workforce.[ii] 
  • According to a survey of generational differences, millennials want to work for a company that makes a positive impact (socially or environmentally), half prefer purposeful work to a high salary, and 53% would work harder if they felt they were making a difference to others.[iii]
  • A recent Gallup survey[iv] suggests that due to different millennial attitudes, we will need to change organizational cultures from “old will” to “new will”.  They illustrate this change in leadership as follows:

                                PAST                                                                  FUTURE

My Paycheck

My Purpose

My Satisfaction

My Development

My Boss

My Coach

My Annual Review

My Ongoing Conversations

My Weaknesses

My Strengths

My Job

My Life

  • There is an inherent risk of ‘ageism’.  Specifically, while those over age 50 are rated highly across the majority of skills and attributes, their potential for future progression is predominately considered to be low (20%) or very low (41%)[v]
  • Note that per a Deloitte research paper[vi], the advisor population is aging rapidly and preparing for a significant transition.  Specifically, with 43% of US Financial Advisors over the age of 55 years old, the industry is contending with the expectation that approximately 1/3 of this current workforce will retire in the next 10 years.  Our industry will need to recruit and train nearly 240,000 advisors just to maintain current service levels.
  • As described below, there are a number of significant differences in assumptions and personalities in these demographics that suggest that we tailor our approach to the demographic groups rather than retaining a one-size-fits-all policy.

Given the culture and atmosphere during the time of their progression from childhood to adulthood, there are significant differences in characteristics in these generational groups as indicated in Table 1.

TABLE 1[vii] – Differences in workplace characteristics across generations

Workplace characteristics


Baby Boomers

Generation X


Work ethic & values

Respect authority


Duty before fun

Adhere to rules

Team player

Loves to have meetings

Question authority


Want structure and direction



What’s next




Goal Oriented

Interactive Style


Team player

Loves to have meetings




Formal Memo

In person

By phone




Voice mail

Feedback and rewards

No news is good news

Satisfaction in a job well done


Title recognition

Sorry to interrupt, but how am I doing?

Freedom is the best reward

Whenever I want it, at the push of a button

Meaningful work

Messages that motivate

“Your experience is respected”

“You are valued, you are needed”

“Do it your way, forget the rules”

“You will work with other bright, creative people”

As outlined in a 2013 review by the Ethics Resource Center[viii] of data collected earlier by the National Business Ethics Survey (NBES), distinct differences between generations were highlighted and a few of these are comparatively illustrated in Table 2.

TABLE 2[ix] – Differences in levels of acceptability of certain behaviors between the generations

Acceptable Behaviors


Baby Boomers

Generation X


Blog/tweet negatively about the company





Keep copies of confidential documents





Acceptable to “Friend” a client/customer on a social network





Use social networking to find out about company competitors





Upload personal photos on company network





Take a copy of work software home for personal use





Suggestions for how we might more effectively tailor our efforts toward promoting and clarifying our shared values are described below in Table 3.

TABLE 3 – How to emphasize ethics to different generations

Traditionalists and Boomers

Generation X


  • Communicate the company’s commitment to ethics in terms of principles and the provision of formal systems.
  • Focus on messaging from the hierarchy above this generation (i.e. business executives).
  • Emphasize the resources of the ethics program as established systems and trusted leaders.
  • Provide ways for Boomers and Traditionalists to share their experiences using the company standards and systems with other employees.
  • Communicate that when employees report misconduct, they will be protected and informed throughout the investigations process.
  • Make advice and standards easily accessible; when facing an ethical dilemma, Gen X-ers’ ability to review codes of conduct and standards will make a big difference in how they handle the situation in front of them.
  • For those who supervise Gen X-ers, make sure they are aware that this group needs advice. Gen X-ers need to know that counsel is available when it is needed.


  • Communicate the company’s commitment to ethics in terms of people, relationships and integrity in the way people treat each other.
  • Focus on messaging from colleagues and immediate supervisors – those individuals who are more similar to Millennials and therefore more likely to be influential to them.
  • Emphasize the resources of the ethics/compliance program as opportunities to interact with knowledgeable people who can provide guidance and support.
  • Build opportunities for discussion and interaction into ethics and compliance training programs.
  • Provide ways for Millennials to give input into company standards and systems.
  • Communicate that when employees report misconduct, they can check back and interact with the ethics office throughout the investigation process.


By Mark Harbour, CPA, CFA, CIMA®
Mark has served various volunteer roles with the Investment Management Consultants Association (IMCA) - most recently chair of the Ethics Task Force that worked to revise IMCA’s Code and Standards.   He is also a Past President of CFA Society Los Angeles.  His email address is harboal@ca.rr.comBack To Top ^^

[i] This quote and much of the material for this article was drawn from the Institute of Business Ethics - Business Ethics Briefing, Issue 48, June 2015,

[vii] Ibid fn [i]

[viii] Ibid fn [iii]

[ix] Ibid fn [iv]

CFALA Annual Meeting of the Members Highlights Importance of Volunteers

According to official surveys and anecdotal conversations, “location of meetings” consistently appears on the list of things that compel or prevent members from attending CFALA events. Whether one came from downtown or across the street, there was likely not too much complaining about the site of CFALA’s 85th Annual Meeting of the Members. The Annenberg Community Beach House is located on the beach in Santa Monica with a wonderful patio just steps from the sand. It is the perfect setting for networking, thanking volunteers, enjoying a nice dinner and conducting necessary business for one of Southern California’s top professional organizations.
After networking and cocktails on the patio, the meeting moved inside for dinner. During dinner, a slideshow was shown which highlighted some past meetings of CFALA members. If anybody needed proof that CFALA has been in existence for 85 years, some of the pictures came close to providing it.
The event also highlighted the importance of volunteers to CFALA. From participating in “Communities of Interest” all the way up to serving as a board member, CFA Society Los Angeles provides numerous volunteer opportunities that may be year-round or a single event. During the meeting, past presidents were recognized for their contribution toward the continued success of CFALA. Also recognized were Akiko Hayata who won the James H. Fletcher, CFA Emerging Leader Award, and Thomas Mahoney who won the Outstanding Committee Member Award. Mark Harbour won the Outstanding Society Member Award. Spend time with any of these individuals – or any member who has contributed time to CFALA – and one will appreciate how their contributions make CFALA a premier professional organization.
Corporate sponsors also play a large role in many events, and Nomura was recognized for their dedication and generosity as a corporate supporter.
George Dennis presented information about CFALA’s relationship with the California Council on Economic Education (CCEE), a leading nonprofit provider of economics and financial literacy training and resources to K-12 teachers and students in California. CFALA raises funds for CCEE's financial literacy programs through the Annual Economic & Investments Forecast Dinner. For over 10 years, CFALA has provided mentors, graders and judges for students and teachers participating in the annual Financial Advisors Contest.
The evening ended with one of the main purposes of the meeting: election of the officers and members of the Board of Governors. CFALA President Rama Malladi did an excellent job of making quick work of the business part of the meeting. The motions were done professionally, but quickly.
The annual meeting should be on your calendar every year. In a few hours you will have a new appreciation for the work that is done on behalf of our profession. And the price is right: There is no charge for members.
By Tom Derse, CFA
Back To Top ^^

Santa Barbara Group Thrives

For the vast majority, Santa Barbara is a California central coast village with upscale boutiques and restaurants offering local wines and seasonal fare. It is a place where the well-off settle down in the foothills of the Santa Ynez Mountains, enjoying the ocean view and breathtaking sunsets. But don’t let the good looks fool you. In the middle of this cozy place we have been able to bring together a community of local CFA charterholders with one common interest: Learn from each other and leave each and every meeting just a little smarter.
It all started in 2008 when local CFA members, spearheaded by Carol Olsen & Alejandra Folguera, got together for a brownbag lunch with the idea of having someone provide some basic information and lead the discussion about a contemporary issue. Today, we have more that 170 local CFA charterholders and CFALA members along with almost 500 professionals on our contacts list who enjoy our monthly Santa Barbara Luncheon series. Attendees listen to and debating with each other in a very honest and open manner. The quality of each session is top-notch as often there are more than 300 years of combined experience at one table.
The topics are as diverse as the speakers and participants. One month the issue may be macroeconomics, the next month may be domestic or international affairs, and the following month the topic may include non-profit opportunities. Highlights of the past months were Thomas Tighe, President and CEO of Direct Relief with his presentation about the challenges of humanitarian aid in all 50 states and 70 countries. Steve Worthington, founder of two hedge funds with in-depth knowledge about the oil industry, presented on May 26 at the Union Bank Community Center. He demonstrated how to analyze a hedged equity position of a midstream energy company. The next event will be on June 29 at 12:30 p.m. at the Union Bank Community Center. It will feature Ali Bauerlein, founder of Inogen, Inc. Ms. Bauerlein is a UCSB graduate and she will present “From College Start-up to IPO.” Her personal connection to COPD led to a desire to improve patients’ lives and the establishment of Inogen. We look forward to another interesting and informative presentation.
Another well-attended event in Santa Barbara is our Annual End of Summer Party at the Coral Casino Beach and Cabana Club in neighboring Montecito. Every year we welcome CFALA members, not just from Santa Barbara County, but from all over the Central Coast. Everyone is welcome to bring their partner, spouse or significant other to join us in a relaxing atmosphere enjoying the sunset with drinks and the company of each other. This casual event is a chance to get together and know each other a little better without being rushed back to the office. Contacts are made, friendships are initiated and we are sure quite a few business relationships have their origination at this place.
I came to Santa Barbara in 2013 and was pleasantly surprised and astonished to find such an active CFA community. I was honored and thrilled taking over the co-chair function together with George Tharakan, knowing that it will be difficult to follow Ale and Carol’s footsteps who have done an outstanding job as co-chairs in the past. We hope to see some of you at our End of Summer Party at the end of September. The view from the deck of the Coral Casino Club is worth the drive.
By Falko Hörnicke, CFA®, CFP®, Co-Chair of the Santa Barbara Group
 Back To Top ^^

IEX CEO Brad Katsuyama on Lies, 'Flash Boys,' and Egregious Pricing

Finance Editor Matt Turner from Business Insider speaks with IEX Group CEO Brad Katsuyama prior to the SEC's June 18th decision to approve IEX's application to register as a national securities exchange. In the course of this insightful interview, Katsuyama says that if there's good news, the exchange will officially launch a couple of months after the brokers connect and configure their systems; if there's bad news, they will definitely go again. We now know that the news turned out to be good. Read more... And more... Back To Top ^^

Phil Mickelson to Forfeit Nearly $1 Million in SEC Case

Professional golfer Phil Mickelson agreed to forfeit nearly $1 million earned unfairly from an insider trading scheme. According to the SEC, Mickelson profited from but was not a participant in the scheme; he was not criminally charged. The Associated Press' Marcy Gordon and Tom Hays provide us with more details on the chain of events leading up to the agreement. Read more... Back To Top ^^

The B2C Robo-Advisor Movement Is Dying, But Its #FinTech Legacy Will Live On!

In this Kitces.com Nerd's Eye View blog post, financial planner, publisher, and partner at Pinnacle Advisory Group Michael Kitces, CFP, CLU, ChFC, RHU, REBC, CASL (phew) takes a fresh look at the robo-advisor landscape a year after established players like Schwab and Vanguard launched their "competing" offerings.  Read more... Back To Top ^^

How to Help Younger Clients with Student Loan Debt

Have we gotten to the point where even financial advisors need advice regarding the managment of student loans? In this Commonwealth Independent Advisor blog post, Commonwealth Financial Network advanced planning consultant Olivia Zaiya, JD, discusses strategies for helping millennial clients repay, refinance, or seek forgiveness of student loan debt. Read more... Back To Top ^^

Which Regions Will Build the Silicon Valleys of the Future?

Is geography a prerequisite for hypergrowth? What are some of the challenges facing hypergrowth companies around the world? And why do some of them manage to thrive nevertheless? World Economic Forum Agenda Contributor Kaj Tyopponen and Global Leadership Fellow Thomas Philbeck answer these questions and more in this WEF piece.  Read more... And more... Back To Top ^^

Gene Editing Technique Could Transform Future

"CRISPR - get to know this acronym. It's good to know the name of something that could change your future." In this BBC piece on gene editing technology, medical correspondent Fergus Walsh reports on the potential benefits of new treatments and the opportunities for biotech startup firms, as well as this new technology's looming patent issues and ethical implications. Read more... Back To Top ^^













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