Advisor Today - July/August 2015 - (Page 23)

PRACTICE SPECIALTIES ETHICS By Frank C. Bearden, Ph.D., CLU, ChFC What Does It Mean to Act Ethically? The NAIFA Code of Ethics should be the final deciding factor. I conducted a workshop on ethics for financial advisors earlier this year and had an advisor ask me this question during one of the breaks: "What does it mean to act ethically?" He was aware of the NAIFA Code of Ethics, as well as the codes of other professional organizations to which he belonged. He was also aware of the insurance and investment regulatory directives regarding acceptable professional behavior. However, he felt that to behave ethically was to abide by these codes and rules, and something more. The financial advisor was right. Anyone who belongs to a profession and a professional organization knows that behaving ethically means abiding by all applicable ethical codes and regulatory directives. But ethics runs much deeper-to the core of what an individual believes is important or what he values. Ethics involves acting in accordance with what you value. The profession you choose to join should be aligned with your ethics, as should the code of ethics of that profession. The stipulations of ethical behavior in the code of your profession, like the NAIFA Code of Ethics, should comfortably match your value system, so that you are behaving from conviction when serving your clients. My new friend at the workshop agreed that this made sense, but he hadn't thought that ethical behavior began with him. He did state he became a financial advisor because he felt the work was worthwhile for others and had value. I told him that recognizing that ethics means acting on your values is important because of the situations we all face that do not seem to be directly addressed in any code of ethics. What should we do then? When you realize that acting ethically is doing what your values indicate you should-subject to the The profession you choose to join should be aligned with your ethics, as should the code of ethics of that profession. ethical codes and regulations of your professions-such situations are not so difficult to manage. Ethical behavior is then inwardly directed, which allows us to fully consider all important factors in a situation before making a decision. A case in point For example: A potential client approaches you and mentions that she was a prior client of an advisor you know and admire. The individual then proceeds to say she enjoyed working with the advisor over a long period of time until a disagreement occurred relative to a recommendation the advisor made, which the client did not take. She has a referral to you from one of your clients and would like to consider working with you. During the initial appointment with her to explore an engagement, you discover that the recommendation the other financial advisor made was appropriate. How would you handle this? Would you proceed without further consideration of the recommendation, or would you discuss your discovery with the individual and possibly recommend that she speak with the other advisor again about the issue? Remember that individuals frequently have different value systems that direct them in different directions. The NAIFA Code of Ethics should be the final deciding factor. The following obligations from the Code seem to apply to this situation: * To work diligently to satisfy the needs of my clients. * To present, accurately and honestly, all facts essential to my clients' financial decisions. * To render timely and proper service to my clients and ultimately their beneficiaries. * To conduct all business dealings in a manner that would reflect favorably on NAIFA and my profession. * To cooperate with others whose services best promote the interests of my clients. From your value system and the NAIFA Code of Ethics, what would you decide to do? Frank C. Bearden, PhD., CLU, ChFC, is managing member at Ethics Consulting. Contact him at fbearden@ outlook.com or at 210-724-1958. July/August 2015 | ADVISOR TODAY 23

Table of Contents for the Digital Edition of Advisor Today - July/August 2015

From The Editor
Viewpoint
New Products
How Do You Create the Million-Dollar-Plus Practice?
Traits of Top Performers
The Business Benefits of a Pipeline Mentality
What Does It Mean to Act Ethically?
Variable Universal Life is Back
Sell More LTCI By Selling Less!
Overcoming the Most Common DI Objections
Divorce DI
Mitigating Retirement Risks with Life Insurance
Creating Irreplaceable Capital
Closing the Gap
Financial Future Less than Rosy for Boomers and GenX
Estate Planning and Annuities?
Ignite Your Sales Potential
A Closer Look at BTID
Upholding the Tradition
NAIFA’s Candidates for Election
NAIFA News
Addicted to Rejection
What is Keeping Your Senior Clients Up At Night?
Advertiser Index
Back Page

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