How important are ethics in financial services?

By Helen Fisher on July 18, 2018

Ethics is becoming more and more important for financial advisers to build trust with clients.

One of the biggest challenges facing any business in the 21st century is being able to demonstrate an ethical basis for your overall operational procedures.

This has become even more of an issue since the global financial crash in 2008, because having an ethos that reflects the concerns of customers, clients, investors and other stakeholders can mean the difference between success and failure for a business. This is especially true for anyone operating within the financial advice market.

Appropriate behaviour

For many consumers, the global financial crisis was an ethical crisis. Financial institutions, and by association their executives and employees, were seen to be acting in a way that failed their customers.

A mutually beneficial setup is a basic expectation in any financial relationship, and that’s where the presentation of a solid ethical base for your business becomes an essential asset.

The question revolves around how ethics apply to financial services. One simple answer is that it involves ensuring that your company and all of its employees conduct business in an appropriate manner at all times. This can easily be visualised as achieving outcomes for the common good of all parties involved – an age-old basis for any successful business model across the spectrum.

Applying an ethical approach isn’t really that revolutionary or unusual – it’s just that today, the vast majority of people engaging with financial advisers will put it high on their list of priorities.

Ethical buzzwords

Of course, it’s relatively easy to come up with a list of ethical buzzwords and phrases that can be liberally sprinkled across your marketing campaigns. However, today’s savvy customers can see through tenuous mentions of “green” concepts, charitable donations, or diversity and equality programmes that should really be taken for granted anyway.

“Ethical banking” is a prime example of a phrase that can mean anything or nothing. Choosing investments based on the social concerns of investors needs to take into account their desire for returns, and so as such this really isn’t much more than a specialisation filter of the kind that anyone offering financial planning help is likely to employ.

A truly ethical bank would take micro-management techniques and apply them to account holders on an individual basis. At the moment, this is something that simply isn’t possible, but with the unstoppable onward march of “Big Data”, it is perhaps something that we’ll see in the not-too-distant future.

A culture of compliance

In the widest sense, financial advice ethics can only really be expected to be based on an application of responsible professional behaviour. In order for both management and employees to perform their day-to-day duties in a way that adheres to a culture of compliance, your company must have a corporate culture with predetermined moral values.

Simple financial advice can be found anywhere online, but for those looking for a trusted and responsible “safe pair of hands”, the question of ethics becomes a personal concern rather than a more nebulous social one.

An effective culture

The factors that will determine how you go about setting up your own unique “ethical culture” will, of course, vary greatly from case to case. Personal interests and opinions of owners and lead management will play a part and unwittingly or not will be reflected through the strata of employees.

This, in turn, will be picked up by clients and customers interacting with the business, whether these behaviours actually adhere to the values being actively promoted or not. The simple statement of ethical values in codes of conduct for your business will not be enough to make the process a successful one.

Overall, anyone who needs a financial adviser will make a decision on who to go with based on far more than a company’s symbolic position in the marketplace.

Vital values

How can you determine the success of one culture compared to another? The simple answer is that it will be reflected in the way that all stakeholders respond to the implementation of the values that have been chosen and are being promoted.

Internal regulation needs to be inclusive of every member of the company team so that the desired behaviours that express the ethical position are integrated into the day-to-day workings of the company.


Having a process-oriented approach like this is ultimately pointless unless the results are easily perceived by everyone involved. This generates a kind of feedback loop that strengthens the desired behaviours moving forward.

It’s fair to ask how employees can be expected to fall into line with an ethical programme. Obviously, new recruits can be filtered by their willingness to adhere to the expected routines, but for existing employees, remuneration and recognition are easy tools to apply to get to the desired position.

Honesty and integrity

As mentioned above, many companies fall into the trap of thinking that an ethical approach means tapping into the latest social media-generated single-interest campaign. For anyone asking themselves, “Is it worth getting a financial adviser?”, their own immediate needs will be more important to them than how much a potential adviser is paying attention to Twitter storms.

Honesty and integrity in employee behaviour and a demonstrable adherence to these core values in the publicised corporate culture can essentially be all the “ethics” that you really need. It’s a tried-and-tested business approach, and it simply relies on the commitment and “lead by example” behaviour of management, alongside a strict company-wide adherence to integrity standards.

Where to now?

The rollout of a compliance programme can start at any time. The first step is to approve policies and procedures that will ensure that the ethics being adopted and promoted are applied across your business. Marketing must be built around promoting these values, and once the leads have been generated, clients must be able to clearly see that the work you do really reflects the image that you are presenting.

Choosing a financial adviser is something that no one does lightly, but attempting to pander to a possible social bias can only limit your potential customer base and runs the risk of backfiring at a later date. For the successful implementation of ethics in financial services, it is far better to simply choose to promote the core values that you really believe in and that you want your entire operation to reflect.

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