The mission of the European Securities and Markets Authority (ESMA) is to promote effective and consistent regulation and oversight of the EU securities market, enhance investor protection, foster the integrity, transparency, and efficiency of financial markets, and ensure fair competition.

Financial market regulation provides comprehensive protection for investors and clients of banks, investment firms, fund management companies, and alternative investment fund managers. Investment service providers have a legal obligation to follow the applicable know-your-customer (KYC) as well as anti-money laundering and counter-terrorist financing (AML/CTF) rules. There is also a separate regulatory framework designed specifically for the provision of investment services, which consists of the Markets in Financial Instruments Directive (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR), and aims to ensure that investors are provided with correct and comprehensive information about investment products.

As well as these, investment service providers have an obligation to observe the regulations of the Finnish Financial Supervisory Authority and an ethical code of conduct in relation to their clients.

The Markets in Financial Instruments Directive (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR), which entered into force in early 2018, combine to form an intricate regulatory framework aimed, above all, at improving investor protection and increasing the transparency of trading. Harmonized rules also play an important role in allowing trading venues and investment service providers to operate throughout the European Union.

Investment service providers have an obligation to ensure that every member of their customer service team is qualified and competent to provide advice on individual investment products and investing in general. We prepared ourselves for the adoption of MiFID II by designing an online training concept based on the requirements of the Directive and guidelines issued by the European Securities and Markets Authority (ESMA) back in September 2017. The concept caters to all investment professionals and consists of three online courses and two competency tests focusing on the national economy and financial markets, procedures in the provision of investment services, investment products, and taxation. There are also two competency tests on investment products and the provision of investment advice.

Maintaining competence is a life-long process, which is why we have already compiled a number of “Carry On” modules based on MiFID II and ESMA guidelines. Our online courses are designed to be the next step after completing the “License to Operate” MiFID II program; we call this level of advanced learning “License to Carry On”. Our “Carry On” courses cover appropriateness assessment, investment service roles, taxation, ethics and responsibility, suitability assessment, disclosure obligations and product management.

A new law on equity savings accounts, which entered into force at the start of 2020, has played an important role in making investing more and more commonplace. Equity savings accounts have been portrayed in the media as a new way to invest directly in equity and an especially useful tool for actively trading long-term investors. The biggest benefit lies in the fact that dividends and, therefore, tax only become payable when funds are withdrawn from the account. Long-term investors can therefore take advantage of a phenomenon known as compound interest.

Although we are forty years behind our western neighbor, Sweden (which has had similar investment savings accounts since the 1970s), this “new” vehicle is a welcome step forward in encouraging people to get involved in investing and asset management. Providers of these accounts have been staggered by the amount of interest. It remains to be seen whether equity savings accounts are just a passing fad or whether the change in Finns’ attitudes toward investment is for good.

Another exciting phenomenon that is gaining momentum is private equity, which has become increasingly popular in Finland in recent years. Private equity is capital invested in a company or other entity that is not publicly listed or traded. Venture capital is a form of private equity where funding is given to startups or other young businesses that show potential for long-term growth.

In these cases, the entrepreneur or seller usually relinquishes the majority share of their business to the venture capitalist. The idea is not for the investor to keep ownership of the business long-term, however, but to sell up in accordance with an agreed exit plan. The investor is looking for the biggest possible financial return on their investment at the time of the exit. What makes venture capital so attractive as a form of funding is the professional approach that the investor brings to growing the business as well as the investor’s expertise and contacts.

Expertise is key in the venture capital market, as it has a direct impact on the size of the return; it, therefore, pays to keep building competence through training. This can be done, for example, through a special training course run by Aalto EE and the Finnish Venture Capital Association called “Fundamentals of Venture Capital & Private Equity”.

As Pia Santavirta, Managing Director of the Finnish Venture Capital Association, told the Aalto Leaders’ Insight newsletter: “Competence is a venture capitalist’s greatest asset”.

According to an interview given in the Aalto Leaders’ Insight newsletter by Aalto University Professor of Finance Markku Kaustia, global knowledge plays a bigger role in the investment sector than in many other specialized industries. Along with having global insight, investment professionals need a comprehensive and broad approach and the ability to provide business analyses that deliver added value. The individual shares you buy today are not that important in the scheme of overall portfolio management. More important than a single buy recommendation or following the performance of a specific company is the ability to manage the portfolio as a whole: coming up with a strategy that is right for the investor, determining the right risk level, and taking measured risks. “Deciding whether any particular risks are under control or not sounds simple, but it is anything but easy,” Kaustia points out.

Aalto EE teamed up with the Finnish Society of Financial Analysts in 2019 to start running Certified European Financial Analyst (CEFA) courses and boost global investment competence. The CEFA diploma is a prestigious, industry-recognized qualification for European investment and financial professionals looking to improve, complement, and maintain their analysis expertise. The course consists of four challenging modules covering 10 key areas of the industry. Course attendees who pass all the exams and complete the required work experience obtain the right to use the title of CEFA.

The diploma has been developed by the European Federation of Financial Analyst Societies (EFFAS), of which one of the members is the Finnish Society of Financial Analysts. CEFA courses have been run in Finland for over 20 years, and more than 400 investment professionals have bagged themselves prestigious credentials.

Sustainability has become one of the hottest global topics, with almost every industry getting involved. Sustainability is also an important trend in the world of investment and asset management. Responsible investment is on a rapid rise, as exemplified by the growth of the number of signatories to the UN-supported Principles for Responsible Investment (PRI) to more than 2,000 investors worldwide. The combined invested assets of these investors are worth more than USD 80,000 billion. The most notable Finnish institutional investors and asset managers are also among the members of sustainability forums and/or PRI signatories.

Responsible investing may sound like a daunting prospect. There are endless options, approaches, and tools to choose from. The concept is also often confused with ethical investing and outdated beliefs about returns and methods. Finance Finland’s responsible investment survey recently found that 51% of the respondents were interested not only in financial returns but alsoin  the impact of their investments on the environment and society.

The popularity of responsible investing is well deserved, and for private and institutional investors to be able to make investments in line with their own values and sustainability preferences, experts in the field must understand different investment products from a sustainability perspective. Aalto EE runs a training program focusing on responsible investment and ESG analysis, which introduces investment and finance professionals to different sustainable investment strategies and provides useful information about the sustainability of different asset categories, assessing the risks and opportunities involved in investing and measuring impact.

The program is designed to increase understanding of the components of sustainability and how it affects, for example, the choice of business model or the various aspects of an organization’s business. The program also touches on the wider implications of responsible investment on society, the environment, and people, and provides tangible examples of the kind of difference that responsible investments can make..

Satisfying competence requirements requires continuous learning and retraining. Global knowledge plays a bigger role in the investment sector than in many other specialized industries, and the importance of international contacts and competence, responsible investment, and digitalization is only set to increase. Lifewide learning is critical for anyone who wants to stay in the game.

There are clear basic requirements that everyone in the investment industry must satisfy. For investment advisors and asset managers, the foundation lies in KYC and AML/CTF competence and knowledgeable provision of investment services. There is also a wide range of other certifications and credentials that professionals in the industry can pursue, depending on their area of expertise and job description, as well as the legal requirements associated with their role. Lifewide learning is also vital for keeping up with the competition.