I hope he won’t mind me saying it, but I’ve long had a soft spot for Harry Katz, North-west London’s finest financial adviser. In recent years, barely a week has passed without an email from Norwest Consultants’ principal, commenting on my latest column.
Regardless of whether we agree or disagree – and as often as not it is the former, not the latter – Harry’s missives are models of courtesy. He takes the time to explain why I am wrong, what the way forward is and couches it in a patient, rational style that aims to teach rather than berate.
If anyone could make me feel guilty about being constantly beastly towards IFAs, it would be Harry (John Ellis at the LIA and latterly the PFS used to have a similar effect on me, but he is now retired).
It is in such a context of friendly engagement that I want to pick a bone with Harry about ethics, a subject he recently wrote a letter on to Financial Planner, the IFP magazine. In his letter, Harry argued he does not understand why, as part of his CPD requirements, he must devote five hours of his annual study time to the subject of “ethics”.
He writes: “In my opinion, I act with the utmost honesty and integrity when dealing with my clients and in every case put their interests first. I also deal punctually and honestly, and in the best way I am able to, with the regulator, the tax authorities and any other bureaucrats I come across in my daily work.
“Other than that, I really don’t know what is expected of me. I fail to see why it is necessary to fulfil five hours a year of ongoing CPD with regard to ethics.”
It is a fair point but there are some obvious replies. The first is that while Harry may well feel his ethical standards are high and unwavering, not everyone is in the same boat. There have been too many instances in the past decade or so where IFAs have failed the ethics test.
The difficulty Harry faces here is that of creating a CPD environment in which IFAs would somehow be able to self-certify themselves as being completely perfect when it comes to dealing with ethical issues that affect them and their clients. Somehow, I don’t think that is a credible option, even for Harry.
Second, Harry’s position implies that he personally stands to gain nothing from spending five hours a year discussing ethical issues with other professionals, including tutors, or reading on the subject or doing whatever he needs to maintain his CPD compliance. Now, Harry may well be perfect in his ethical approaches to financial advice, service to clients and related issues but I suspect even he might have the odd lacuna in that field.
Third, and this is largely in praise of Harry and his practice, if we accept that his ethical standards are higher than his peers, that suggests he has a lot to teach lesser mortals with whom he would be engaging during his five hours of ethics CPD each year. He should see himself as a resource, while still accepting the potential to receive the odd glimmer of insight from his fellow-CPDers.
There are related issues that flow from the ethics-as-CPD debate. One is the issue of whether anyone in any walk of life ever gains much from a structured, even ritualised discussion on ethics. Surely you either get it or you don’t. If you do, why bother repeating yourself? If you do not, you shouldn’t be in the job.
Except that life is never like that. All of us start off with a set of ethics and a code of moral values in whatever work we do. The difficulty is that over periods of time those codes can slip or get bent out of shape. CPD offers an opportunity to rediscover and reconnect with the morals we had when we first started out in business.
Moreover, there is one more thing ethics CPD classes achieve – they prevent anyone from claiming that what they did came out of ethical ignorance.
Finally, there is the question of whether compulsory ethics teaching can ever work. Isn’t it a bit like forcing a five-year-old to eat sushi and like it?
Actually, the evidence on this score is slightly inconclusive. Some research from the US suggests ethics classes in business schools are not always effective. But that may be because many focus on bringing former business fraudsters to tell impressionable students how they cheated. Saying sorry doesn’t always sound convincing when you are Gordon Gekko and you made millions out of gullible clients.
The sessions that seem to work best focus on dilemmas, where there are no automatically correct choices but where you have to arrive at the best solutions through discussion and, thereafter, continuous reflection on your daily practice. It works for nurses, dentists, accountants and even lawyers, so why not IFAs?
I suspect Harry has a lot to offer in this area. Rather than keep them all to himself, he should share his ethical insights with fellow IFAs in a learning environment, as he has shared his other views with me. They and he would both gain from the experience, as I have.
Nic Cicutti can be contacted at firstname.lastname@example.org