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Fiduciary Responsibility, Risk Management Top List of CIMA Enhancements

Knowledge of passive investment strategies, portfolio risk management, behavioral finance, fiduciary responsibilities and ethics top the list of enhancements to the Certified Investment Management Analyst (CIMA) certification process, according to a new report.

Based on findings in the Investments & Wealth Institute’s study, “Defining the Future of Investment Advice: Industry Dynamics & CIMA Job Analysis Study,” the CIMA Certification Commission revised the Core of Body of Knowledge into five domains covering 22 sections that investment advisors and consultants with at least three years’ experience will be required to know.

“The bar of professionalism continues to rise in our industry. Conducting a job analysis is crucial to not only asses the pulse of the advisory industry, but also to gain insight into what advanced competencies are needed to better serve clients today,” explains Sean Walters, CEO of the Investments & Wealth Institute.

The study surveyed 2,050 investment advisors and consultants between August and September 2017, augmented with focus groups comprised of subject matter experts, to better define investment advisors’ and consultants’ responsibilities, including the knowledge, skills and abilities required to perform daily activities. Key findings of the study include:

  • 99% of respondents rank applying ethical standards throughout the client process as an important task, and 97% say knowledge of fiduciary responsibilities for different types of clients (e.g., individuals, endowments, trusts and retirement plan clients) is also important.

  • Advisors placed substantial emphasis on passive investment vehicles and strategies, with 92% of respondents rating it as an important knowledge set to have.

  • Understanding responsible investing, including ESG, impact investing and socially responsible investing, was rated as important by 72% of respondents.

  • Demonstrating an interest in leveraging behavioral economics, 91% of advisors said it is important to customize their own communication style based on clients’ behavioral investment types, with 80% believing it is critical to “discuss clients’ biases and mental heuristics to illustrate potential impact on outcomes.”

  • 97% believed investment advisors should understand the types of risk to which clients are exposed and 98% rank managing portfolio risk as an important or critical skill for investment advisors.

Resulting Changes to Core Body of Knowledge
According to the report, to better reflect the knowledge competencies and certification requirements for CIMA to meet the future needs of investment professionals, the following changes were made:

  • Create a new section on real assets.

  • Place additional emphasis on passive investment vehicles and strategies, including a new section covering investment philosophies and styles.

  • Include a new topic area outlining responsible investing, including investment analysis and portfolio construction related to ESG factors, impact investing and socially responsible investing.

  • Increase focus on ethics and fiduciary principles and guidelines under an expanded and consolidated application domain, “Portfolio Construction and Consulting Process.”

  • Substantially enhance knowledge and skills related to behavioral finance and portfolio risk management.

  • Implement additional emphasis on tax and regulatory education through executive and ongoing continuing education.

Beginning June 1, 2018, the revised body of knowledge will be taught by the program providers that deliver the CIMA executive education program: The Wharton School at the University of Pennsylvania, the Chicago Booth School of Business, Yale School of Management, and the Investment Management Research Program at the University of Technology, Sydney. The revised CIMA certification exam requirement will commence Aug. 1, 2018 at Pearson Vue testing centers worldwide.

In addition, the report notes that the current five-step certification process, will become a four-step process effective March 1, 2018. Rather than completing the examination requirement in two steps, the CIMA Certification Commission has combined the qualification and certification exams into a single comprehensive CIMA Certification Exam, the report notes.