Annual audits maximize the advisory firm's professionalism because the firm is required to keep up to date with regulations and best practices. The CEFEX audit helps foster a culture of continuous improvement within the firm.
The assessment process for CEFEX certified investment advisory firms is frequently updated to address changes in regulations and evolving best practices. The CEFEX ‘eco-system’ effectively encourages sharing of best-practice between firms thereby ensuring that all are maximizing the development of professional skills.
The annual CEFEX assessment involves the issuance of Opportunities for Improvement (OFI) for the investment advisory firm. The OFI’s are specifically related to the best practice standard and the firm is expected to take action within the 12 months of OFI issuance. OFI’s can be issued at any assessment, thereby instilling an ongoing effort to improve services and processes. These efforts can be incremental improvement over time or breakthrough improvement all at once.
W. Edwards Deming, a pioneer in quality management systems, saw continuous improvement as a system whereby feedback from the process and the customer were evaluated against organizational goals. CEFEX assessments stimulate this effect on the advisory firm.
All advisors must deal with the threat of low industry standards – before investors do it for them.
“The industry must make a uniform decision to raise the bar of standards and education, lest run the risk of permanently undermining gains made over the past 20 years.”
See commentary in RIABiz.
Experience in other industries
Certification programs have been in place in other industries for over 50 years. The International Organization for Standardization promotes standards for generic disciplines such as quality management and environmental management, and specific disciplines such as automotive, aerospace and food.
From surveys conducted by the Independent Association of Accredited Registrars (IAAR), the external benefits of certification include improved customer satisfaction, greater quality awareness, better documentation, increased efficiency and positive cultural change.