It's no secret that the past several years have been troubled times for the financial services and investment industry. No one should claim that the crisis of confidence is over simply because capital markets have returned to pre-global financial crisis levels. One only needs to look at the recent events in Cyprus, the proposed legislation to cap investment manager compensation throughout the European Union, or the continued drum beat of regulatory reforms around the world, to realize all is not well with the investment industry today.
The global crisis exposed the mass interconnectivity of the international financial marketplace. Studies estimate that the crisis cost at least $12 trillion U.S., or a fifth of annual global GDP in value, and at least 20 million jobs. To save the global economy, taxpayers around the world have been forced to bail out financial institutions, which is an amazing example of turning the other cheek. But that kind of charity can't be expected again.
Unfortunately, when you take into account the associated social impact, the true cost of the global financial crisis is even higher than the numbers indicate. The public's diminished trust in markets today means people are investing in an overly defensive manner, or in some cases, not at all. This has two serious implications: first, it hurts individuals' ability to grow their savings and build wealth for retirement, and second, it deprives the economy of the capital needed to fuel growth and create jobs.
It is my firm opinion that it falls to the leaders in my profession, those working in the investment and financial service sector, to restore trust and confidence in the marketplace. Reform of the sector must come from within, and not simply be left to regulators, governments and the wider public to take action. It is the employees and executives working at private sector firms around the world who have the power and ability to shape a more trustworthy financial industry that better serves society.
Last month, CFA Institute hosted its annual conference in Singapore, bringing together more than 1,200 representatives from across the global investment industry from our membership of more than 100,000 professionals. As a global organization representing the financial services industry, our role is to lead and provide practical solutions to restore confidence in financial markets. We acknowledge the continued crisis in confidence and are striving to rebuild trust in the industry and its practitioners in several ways.
We recently launched an initiative we call the Future of Finance. This project is a guiding hand to those in the financial sector so it is best equipped to serve those who rely on it for retirement, managing risk, funding infrastructure projects, growing business, and ultimately driving the global economy. We welcome all who are interested in this initiative to join CFA Institute in making this project a trusted resource.
Professionals must step forward and deliver on the industry's promise that it is trustworthy, forward-thinking and serves society. Make no mistake; this will require extra effort. Markets around the world are beginning to recover from the financial crisis, for which we can all be thankful, but now is not the time to count our bonuses and pat ourselves on the back. We need to look ahead and ensure the actions we take today are elevating the financial services industry to its true potential, one that serves society and generates security for all.
John D. Rogers, CFA, is President and Chief Executive Officer of CFA Institute.