If you work in the financial services industry, you’ve probably heard of the Financial Analyst Code of Conduct, or FACC. You may have even committed yourself to following its principles, but in practice, we all need to ask ourselves: Do I really know what this means? How do I practice it? This article will explain what makes up the FACC and how you can actually begin implementing it into your professional life and career success.
Introduction
The Code of Conduct for the financial analyst professional is a statement of basic principles and standards that set forth what is expected from an individual in order to be considered a professional in the finance industry. In other words, these principles and standards are key to being respected as a member of this field. As such, they are included here to provide direction for the general responsibilities of a financial analyst professional.
Key Components of Financial Analyst’s Job
The typical work day of a financial analyst is spent researching securities, analyzing company data and markets, and creating reports. They also maintain and manage portfolios for both individual investors as well as large institutional clients such as pension funds. A finance analyst’s job has four key components.
1) they use analysis to take a holistic view of the market place by creating models to predict what will happen in the future based on past actions, current trends, and other factors.
2) analysts must be able to communicate with those who need their research findings (e.g., directors or managers).
3) analysts are required to remain impartial when it comes to personal bias or when making investments themselves.
4) financial analysts must obey the professional code of conduct which requires them not only to act ethically but also requires them not give advice that would benefit themselves more than it would benefit their clients (i.e., potential conflict of interest).
Role of Performance Analyst
The role of a Performance Analyst is to create an unbiased, accurate analysis of a company's performance. They primarily focus on in-depth financial and performance reviews in order to make sure the company operates within fiscal standards and to establish targets for future goals. These professionals must follow the standards set by the profession, as well as be fair, honest, credible, and open-minded when analyzing a company's performance. They are also tasked with evaluating the impact that any changes or external events will have on an organization, such as economic or technological shifts. It is important that these professionals never let their personal beliefs interfere with their judgment during this process, but it is important to keep in mind that sometimes companies may not provide all of the necessary information required for a full review. A professional may need to get creative at times and use outside sources if they are unable to find adequate data from public records or interviews with employees.
Ethical Considerations in Performance Analystship
The purpose of ethical considerations in performance analystship is to provide guidance and guidelines to help professionals avoid situations where they may be putting themselves in compromising positions. As a financial analyst, it is important to be mindful that client interests are always more important than personal, organizational or commercial interests. A violation of this principle could result in harm to the individual, the organization or the industry. Below are some key points from their professional code of conduct:
The duty owed by an analyst to the organization must take precedence over any duty owed by an analyst to another person within the organization including superiors and subordinates.
Analyst's judgement should not be influenced by personal relationships with those involved with the business being analyzed unless disclosure is made at the time when an evaluation was made known.
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Direct Effects on Performance Analystship
As a financial analyst, you are responsible for gathering and analyzing the data on which investment decisions are made. As such, it is critical that you maintain the highest ethical standards in your work. You will be acting as an agent of the company while doing your job, so it is critical that you do not knowingly provide incorrect information. This includes complying with laws and following prescribed rules and guidelines, adhering to a code of ethics and maintaining confidentiality where warranted. Doing so will help protect your company's assets and reputation. It will also uphold the integrity of the profession and build public trust. If you have any doubts about what is right or wrong in a particular situation, consult your supervisor or a trusted colleague before proceeding.
Indirect Effects on Performance Analystship
In the frequent case, research on the effects of misconduct on performance analystship has been exclusively negative. In turn, this findings could serve as a rationale for making certain aspects of analyst misconduct grounds for dismissal in other firms. More importantly, though, the observation that investment managers are choosing not to hire analysts who have engaged in misconduct provides evidence that analysts are less likely to participate in illegal or unethical activities knowing they risk losing future job opportunities. In order to establish an environment with ethical standards and behaviors that can promote growth, these steps must be taken: Developing a code of conduct specific to performance analystships. Setting ethical guidelines based on measurable values (such as integrity). Evaluating compliance annually by conducting surveys and establishing a system of rewards and penalties for compliance violations. Creating sanctions and punishment systems aligned with organization values; not just legal requirements.
For many professionals outside the profession of financial analysis, ethics is often reduced to its simplistic Golden Rule form - do unto others what you would want them do unto you - which does not provide adequate guidance for professional conduct in most situations.
Conclusion
The professional code of conduct for financial analysts is strict and formalized. In this post, we discussed the importance of adhering to the ethical code in all aspects of a financial analyst's job, as well as implications if one does not. There are various levels at which ethics can be applied, from one's self-work ethic to how one acts in their work with others. For example, when working with others on projects or goals, it is important to act ethically by recognizing that people have different viewpoints and values that should be respected. It is also necessary to maintain confidentiality when discussing sensitive information or clients' personal data.
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