Ethical Issues In Business: I’m Here to Vilify the Investment Adviser Industry

Ethical challenges and ethical decision-making processes experienced or witnessed by U.S. financial advisers.

Hello, I’m here to vilify your Industry,

As an investment adviser, I am not frightened by many things including questionable ethical issues in business.  I have weathered enough negative markets to give me the tools, knowledge and courage to help my clients fulfill investment needs and goals. Dealing with economic and industry issues is what I do. This is why I was recently surprised by, what may be, one of my top industry concerns.  In addition to deception and scandal caused by rogue investment advisers, I just discovered I need to be aware of the role consumer protection agencies play in the denigration of an industry, and the mistrust of advisers who are charged with solving problems.

Please don’t get me wrong.  I see client best interest as the most important role of the investment adviser.  I take this very seriously, and, over the years I have dedicated time and personal resources in education that has molded me to be the best fiduciary and knowledgeable adviser personally possible.  I am a fierce supporter of investor protection.

This is why that in addition to the FINRA Certified Compliance Professional designation and Master degree from Creighton School of Law, I have pursued an Education Doctorate degree.  I knew my role was to do more than research and publish. I needed to formalize questions, seek answers and finally put into practice a stated problem solution with research leading to methods of improvement.  After three long years of literature review and a national qualitative research project, I am seeing the big, and important, picture.  The topic:  ethical challenges and ethical decision-making processes experienced or witnessed by U.S. financial advisers.   I’m fully engaged in the need to foster deserved trust in the U.S. financial industry. Ethical culture change in business is the launchpad.

What I’ve found out so far is interesting.  Creating earned investor trust by creating an ethical industry is the answer (no surprises there).  The important message, gleaned from nationwide research, involving practicing investment advisers and CFPs®, is that deceptive practices by rogue advisers will not be healed and improved by ethics training. The second message from this study is that our self-regulated industry must effectively find the tools to identify and permanently bar rogue advisers from all financial services – including banking and insurance.

Ethical Leadership

Back to Investor Protection

So, wouldn’t the objective of identification of rouge advisers and their permanent expulsion from the industry seem to be a critical objective for investor protection?  If the sentiments of federal investor protection agencies are represented by a visit I had this week with a member – apparently not.  Investment protection is charged with finding deception and bad practices culminating in advocacy for the investor.  There is little incentive in seeking adviser observations or recommendations for industry safeguards and improvements.  In fact, at the end of the meeting, I simply asked suggestions as to how our industry should or, could, permanently remove weak leadership and rogue advisers.  The suggestion?  Remove incentives.  Fully agreed – but just one small cog in the machinery.

I get it.  Healing an industry that you are compensated as a watchdog, is not your primary objective.  Reporting scandal and being a media star trumps all.

Please let us know your thoughts –

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