Financial advice does not have sufficient ethical capital at present to overcome negative media reports about the sector which in turn damages the reputations of advisers who have done nothing wrong according to a leading Australian ethicist.
The Ethics Centre, Executive Director, Simon Longstaff said that financial advisers are viewed with mixed opinions by the public due to media coverage of the sector and recent scandals which have embroiled companies but which “taint the pool for all”.
Speaking at the recent Association of Financial Advisers National Conference in Cairns, Longstaff said the view was mixed because those with personal experience or links to financial advisers regard them as sound.
However, he said the financial advice sector had not built sufficient ethical capital with many people so that when they heard or read about a scandal they could reject it as not being the case across the board.
“The other side of this is that financial advisers are feeling damaged despite not having done anything wrong,” Longstaff said pointing out that there was still ambiguity around where financial advisers were positioning themselves.
He called for advisers to move beyond base compliance, stating it was necessary but that professional advice had to be more than meet minimum compliance standards.
“Financial advisers need to be equipped with professional skills and build from them firstly. They need to consciously do this so they will not fall back into a shallower position of just compliance when they are challenged,” Longstaff said.
He said when advisers aspire to be members of a profession they begin to focus beyond themselves and are concerned with the interests of others, including their clients and the wider advice profession.
“In a profession the job is not to satisfy wants but the interests of others…”
“The market is about self-interest and satisfying peoples’ wants. In a profession the job is not to satisfy wants but the interests of others and to sub-ordinate your own while doing so. There is also a general obligation to society, not to put it at peril,” Longstaff said.
He also stated that for a profession it means supporting industry moves to higher standards and ensuring others adhere to those standards while standing with those who already adhere to them.
He said the only obstacles for financial advisers to overcome in reaching this type of status were “those of your own making” and that “no-one needs to compete on ethics”.
“This is not about wearing hairshirts because millions of people need help and the country is better off if they get it.”
