Money Management 31/08 – Consumers push the drive for ethics
The growth of interest in ethical funds has been well documented but the successful staging of a two day ethical investments conference in Sydney last week confirms this is a growing market.
Regardless of the viability of these funds this means that consumers are starting to dictate the terms by which fund managers roll out products. This means that some will steer away from a fund offering if they don't feel it meets their criteria, which may be as wide and varied as the people who invest in them.
At the heart of this all is the fact that people want companies and products that do the right thing. Triple bottom line accounting is not a buzzword in Europe anymore, even the likes of the Shell Oil Company took a hit before it started to recognise that profits, people and environment all had to be considered on a balance sheet.
The upshot for planners in all this is not that they should have a great understanding of ethical products and companies, though this can't hurt do so anyway. The important thing here is that ethically minded clients will want ethically minded planners.
These ethics will go beyond being sympathetic to a cause but be evident on a practice level - in the way advice is given, recommendations are acted upon and how business is done.
The very notion of ethics seems an easy concept to conjure up in the mind but harder to grasp, nail down and live by. The FPA and ASIC have both put moves in place to ensure advisers have adequate skills and understanding in terms of advising. There are no doubt many fine, if not exemplary, advisers in the industry who adhere to these laws and codes of practice.
However as an industry publication Money Management often sees and hears of advisers doing the wrong thing and ending up either turfed out of the industry or dealing with the judiciary system. These stories are not pretty and most speak about a breach of trust.
That is what ethics is all about. What the FPA and ASIC have in place are codes of conduct, not ethics. While it may seem strange to read about ethics from the pen of a journalist it is worth remembering that ethics are like trust, invisible, intangible but ultimately of enormous worth.
By now the planning industry is well acquainted with the idea of professionalism and standards as a way of building its image in the eyes of the community. It may sound old fashioned but a greater focus on ethics could lift that quest another notch.
It may sound like another flogging of a dead horse but if it has already become an issue for clients and the investments side of the industry why shouldn't it also be for those who sit between the two?
AUTHOR
Jason Spits
Recommended for you
The month of April enjoyed four back-to-back weeks of growth in financial adviser numbers, with this past week seeing a net rise of five.
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With the election taking place on Saturday (3 May), Adviser Ratings examines how the two major parties could shape the advice industry in the future.
