Now I, like you, have read the academics’ interpretation of ethics and all that shows is how out of touch they are with the concept and with the practice.
What we need is something that the public can look for and we can also adhere to without it running to the size of a small novel. A key component is the approach to dealing with a conflict of interest. Some time ago, an adviser in the US who was CFP-qualified could opt out of the code, promote something where there was a clear conflict, then opt back in.
This was never intended under that code but its drafting led to it being nothing more than window-dressing. Thankfully, it has now been revised and the code is on acting as a fiduciary even when you are not, in other words, always putting the client’s interests in front of your own.
Please do not suggest an ethics exam. This is a heartfelt plea as it is not a topic for recall or for a single interpretation (that is, that of the examiner) it is a cultural shift.
Let me explain. As a young broker consultant at Royal, our general insurance colleagues would seek our help in delivering the rules of golf as Royal sponsored its annual publication.
Having read this tome on several occasions, it would be easy to see these rules as the sole arbiter over a person’s behaviour on the course and towards his fellow players. That would be quite wrong. It is the etiquette that really matters – being conscious of others and treating them as you would expect to be treated by them.
Scenarios as a CPD approach are, I believe, the answer, where you can observe, detect and reflect on the situation. Making such a test an annual requirement is essential as the fire and forget method is not suitable here.
Some years ago, I attended a conference in the US at Scottsdale, Arizona. One of the sessions was on ethics and the professor was from Phoenix University. She took us through pictures of well known unethical businesspeople and asked us to determine the common denominator. All answers were rejected.
Suddenly, I had a blinding flash and said: “They were all bullies.” She confirmed that I had hit the nail on the head.
It is one of those things that become more obvious the more you think about it. She went on to give more examples and that served to flesh out the kind of code that would have some real effect.
Just as school bullies need people to stand up to them, in business, it may be a different environment but that key advice holds good. We need to enable people to adhere to a code but to also be able to report unethical behaviour in the market or in their firm confidently and not feel that individual behaviour is the sole defining point.
We do not need long-winded and overly complex codes. The examples may be long but the key tenets must be short and to the point and not confuse.
Ultimately, ethics is a vital cog in the TCF wheel. Where it is at low ebb, any chance of a positive TCF report must be extremely remote.
Robert Reid is managing director of Syndaxi Chartered Financial Planners