Ethics is at the heart of what planners do. Some may think it's about compliance, others about CPD. In fact, several speakers including Simon Collins of Resources Compliance and Phill Billingham CFP^CM of Threesixty commented that compliance was not ethics. Compliance is merely the lowest common denominator in regulatory terms - a "hygiene factor."
Looking at the IFP's Code of Ethics, Adam Samuel then highlighted some areas which are often misconstrued. The actual code itself is only one and a half pages of A5 – not a hard read, with the remainder providing useful guidance. With several countries (most notably the US) engaged in a debate over "Fiduciary Standards," Adam then highlighted why this is unnecessary in the UK. Firstly, any independent financial adviser acts as the agent of their client and therefore already has a legal fiduciary duty under the law of agency. The IFP Code of Ethics also already requires a fiduciary duty under the section "Placing the client's interest first". The section on objectivity also clearly states "...always ensuring that the member's interests are clearly subordinate to the best interests of the member's client." Simon Merry of Trust and Confidence by Design, gave an interesting presentation on the drivers of trust and the tools that can be used to build and maintain it, in particular focussing on the need to communicate well with stakeholders.
Finally, Paul Resnik of Finametrica explained that as planners we are in danger of projecting our own tolerance of risk onto clients. He outlined the need for a reference point to benchmark against and showed how the population can be split into seven risk groups according to psychometric techniques. With Financial Planners typically skewed towards the higher end of the risk tolerance scale, and this could influence clients to take more risk than they were comfortable with and risk unsuitable investment decisions.
It was a great day with plenty to think about. As Financial Planners, we've led the way in developing good ethical business practice, something we must strive to maintain through attending events like this one