Codes of ethics can be an effective means of guiding and directing personal behavior – I believe this is true as long as the person adhering to the codes actually adheres to and believes in them. Otherwise it’s just words memorized for an exam or used in vain in a feeble marketing attempt to gain clients. Perhaps I am being too harsh or too opinionated, but for me, codes of ethics or any type of code for that matter such as the Code of Law, the Internal Revenue Code are pretty uniform and significant words that are to be followed appropriately.
As mentioned above however, the Code of Law or the Internal Revenue Code are only going to be followed and upheld by those who believe in following them – there will of course be those that choose not to follow those codes and break the law. Granted, codes of ethics in financial services aren’t necessarily laws, but the same belief should apply to those codes as there is to the code of law. I believe codes of ethics work for those individuals who already have a moral compass and use the codes as guidance and to be better. Those that are already unethical will disregard any code.
There are seven principles in generally every code of ethics in financial services. They are integrity, competence, objectivity, confidentiality, fairness, professionalism and diligence. I do feel that these principles are good to have, but I feel, based on my own definitions that some could be removed simply because I feel there’s overlap. For example, competence could be removed and essentially placed under the principle of professionalism. If one is truly a professional and seen as a professional then they are going to have and maintain the competence to do the job. Competence doesn’t include anything on its own that isn’t included in professionalism. By definition, competence is doing something successfully or efficiently; also requiring skill, mastery and expertise. This is what a professional is.
Likewise, confidentiality, fairness and diligence could fall under the principle of integrity. By definition, integrity is the quality of being honest and having strong moral principles. Synonyms of integrity include fairness, honesty, and trustworthiness. If a financial professional has integrity, then they will be diligent, fair and confidential. This does imply however, that integrity is very ambiguous and with so many words falling under it may be difficult to guide and direct any particular behavior.
If I had to remove a principle it would be fairness. From a pure redundancy standpoint fairness could be included in objectivity – with fairness being defined as making judgments free from discrimination. I believe objectivity would include this definition, but would not be exclusive to this definition – meaning that being objective not only includes fairness, but also other qualities such as free from bias, etc.
Finally, if I had to add a principle it would be loyalty – which is a feeling of strong support to someone or something. Perhaps we could take this further and make loyalty an action, rather than a feeling. This means being vested in a client’s success and welfare throughout the professional relationship. If financial professionals were loyal to their clients and not their company or paychecks, I feel the industry could move forward and progress more quickly towards being recognized as a true profession.
I know this can get pretty murky and heated when we talk about contracts and whether a professional is loyal to his or her company first based on an agency contract. But if professionals were loyal to their clients – truly loyal and devoted to them – then I feel there would be a shortening of the divide between clients and professionals and the general public would be in a better position to trust financial services professionals.
