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OVER the past several years the Financial Planning Association (FPA) has, on its members’ behalf, run a substantial promotional campaign on the ‘value of advice’. This has focused on encouraging Australians to seek the advice of FPA members when considering their financial future. The campaign stressed the quality of the advice and the value and integrity of FPA members in providing this.
Yet, having spent all this time, effort and money to improve public perception, and lift educational levels and skills of planners, stories of retirees leveraging beyond their means and some investors being forced to sell their family home are appearing in the general media, with the potential for all advisers to be tarred with the same brush.
I don’t necessarily believe that as an adviser, my reputation with my current clients will suffer as a result.
However, every potential or new client that walks through my door and who has watched the TV or read the papers may view me and other professional financial advisers with a negative perception.
This increases the potential obstacles we will face in trying to reach new clients and formulate a sound financial plan for them, not to mention the effect it will have on operating our businesses successfully. Furthermore, many advisers could be detrimentally affected through increased professional indemnity insurance premiums.
This has left me considering the whole notion of ethics and greed. Is it just another part of the investment cycle in which financial excess produces the Gordon Gecko’s of this world? The triumph and the failure of Wall Street and the maxim that ‘greed is good’. It begs the question: did some advisers lose sight of their ethics?
According to Socrates, at the core of ethical behaviour was the question: ‘What ought one do?’ He first posed this question about 500BC, and here we are 2,500 years later still pondering.
However, by merely asking what one ought do, we are brought to a consideration of something more fundamental. Ethics is not an esoteric concept; it is as basic and grassroots as truth and honesty. It is letting our clients and potential clients know that we will treat them as we would wish to be treated ourselves — that is, with dignity, respect and trust.
Ultimately, it is at an individual level that we each have to establish ethics and accountability.
In the same way that we expect our children to grow and learn and take responsibility for their lives, we as financial planners have to develop and refine an ethical framework and a value-set that we can commit to and live by. We can then use this as our yardstick and measure the ethical framework of everything else that we value against this.
However, ethics for a profession need to have a real point of reference. You have to believe in them. You can’t expect people to adopt and adhere to a code of ethics merely because it is written. They need to own it, and the values need to be demonstrated and taught within every aspect of our profession from top to bottom.
We aspire to be treated as a profession. If we look to the Australian Medical Association for our example, and the way in which doctors approach their professional responsibilities, they state it is their “… primary commitment to serve others through an adherence to a strong ethical code based on values such as respect, altruism, integrity, excellence, collegiality, collaboration, accountability, leadership and trust”.
You could insert this word for word into any financial planning code of ethics and it would sit perfectly.
In our profession, the concept of trust and integrity are our currency.
Every client that chooses to work with us believes we are going to do the best by them, taking their personal circumstances into account when making our recommendations. With every aspect of financial planning we encourage clients to develop trust in our advice and process. However, with this comes responsibility and we can’t treat this lightly.
Clients open up to us and discuss matters of finance, health, relationships, death and mortality because they trust us to deal with them in a caring and considerate manner.
It is to ensure the protection of the client’s interest that the legal system and our professional bodies have established the laws and frameworks of our professional accountability. Whenever individuals in our profession breach those standards we need to act positively and strongly to ensure there is no repeat. However, it is not within the law, but within each adviser’s sense of ethical behaviour that our professionalism will truly be defined.
The one thing that financial practitioners value more than anything else is their reputation. Tarnish that and each and every one of us suffers. Equally, each and every one of us, in association with our peak body, is charged with upholding that reputation and enhancing our profession.
There will always be investors for whom more than enough will never be sufficient.
Equally, there are those for whom a small amount is everything they have and each dollar is precious and deserving of care.
The true expression of an ethic is each and every one of these clients expecting the same standard of integrity, trust and expertise from their adviser — and receiving it.
Murdo Macleod is an authorised representative, Fiducian Financial Services.
This commentary was sparked by an excellent essay by Simon Longstaff, executive director of the St James Ethics Centre, titled The Role of Ethics in Commercial and Professional Relationships. It deserves to be read by every financial adviser. It’s not an academic treatise but it does look at some of the core issues that our profession needs to consider.
