Margaret Franklin, who took heat for her advocacy of controversial Diversity Equity and Inclusion policies as CEO of the CFA Institute, has announced that she is leaving the organization.
The announcement, made last week in an email to the group’s 200,000 members, described Franklin’s departure as a “planned retirement.” Since 2019, she had been leading the organization known for administering the grueling exam that for decades has been a rite of passage for Wall Street analysts.
A CFA spokesman said Franklin and the CFA board of directors “had been talking about this for a while. She will be an adviser for the rest of the year.” Through the spokesman, Franklin declined On The Money’s request for a comment.
But her departure comes at a tumultuous time for the CFA Institute. As early reported by On The Money, Franklin’s was behind a Diversity Equity and Inclusion code of conduct foisted on the institute’s members beginning back in 2023. The institute’s spokesman points out the code was voluntary. But members complained to On The Money that Franklin and her team implored its adoption by big asset managers and top financial firms, including that they use race and gender as factors in job-related decisions including the promotion of wealth managers.
The debate over the DEI code has led to an uprising against Franklin and her team running the CFA Institute to address what critics say are glaring abuses of corporate governance under her watch.
Beside the pushback from membership, Franklin & Co., ran into changes in the law surrounding DEI. Just after the code of conduct went into effect, the Supreme Court ruled that discrimination based on race and sex unconstitutional in a case involving college admissions. The Trump administration has cast further legal doubt on the use of DEI, either in an academic or corporate setting.
Executive orders from the president rendering DEI a form of discrimination gave further legal heft to what SCOTUS ruled; if companies continued to impose DEI they could face litigation from the Justice Department’s civil rights division suing on behalf of those allegedly harmed.
With that, scores of companies — from JPMorgan to Goldman Sachs and even left-leaning tech outfits like Amazon – began to rewrite their hiring standards, including eliminating the acronym DEI in public and private policy statements.
Under Franklin, the CFA Institute also began to revise its inclusion policies, as On The Money reported last September. The so-called Inclusion code no longer calls on money managers and financial advisers to consider so-called intersectionality in their business practices, everything from hiring to investment decisions.
The institute also struck the words “race” and “gender” from the new code, members told On The Money. Instead, it implores members to make “employees feel valued, respected, supported, and fully able to participate in the workplace, regardless of their human attributes, perspectives, identities, and backgrounds.”
But critics of Franklin say the rewriting of the code doesn’t go far enough in fixing what they say ails the group. Chris Cutler, a long-time CFA member, former vice chair of the CFA Institute of New York, and founder of a hedge-fund consulting firm called Manager Analysis Services, has mounted a proxy fight to seek broader management changes to the institute including ending all vestiges of DEI.
Cutler says the CFA Institute still advocates DEI for its members outside of the US, meaning it continues to be practiced with the institute’s blessing at some of the biggest sovereign wealth funds in the world.
A long time critic of Franklin and her inner circle, Cutler is looking to end DEI in any capacity and seeking to implement vast management changes in the institute’s corporate governance. For starters he wants local chapters to have more say in picking leaders; he says most of the people in the local chapters are opponents of DEI because of how it degrades merit at an organization that calls itself “the gold standard in ethics and transparency in finance.”
But those local chapters have virtually no say over the selection of Franklin’s successor, as decision making is centralized at the national level controlled by Franklin and her supporters on the institute’s board of directors. Meanwhile, he says their relaxed management has led to financial irregularities at the group.
Cutler says he needs just 2% or 4,000 of the CFA members to sign on to his effort by the institute’s June board meeting to make the changes happen.
“Despite the CEO’s resignation we continue with the proxy campaign,” he told On The Money. “CFA’s board approved changes that alienated leadership of (CFA organizations) and promoted DEI globally. We want leaders to have a majority voice on the board to prevent this from ever happening again.”
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