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Professional Ethics and Trust

By Daehong Kwon, CFP

One of the features that distinguishes the CFP designation the most from the other financial professionals or financial planners is the fact that we consider ‘ethics’ the most important virtue. It is true that ethics is one of the fundamental elements for every professional in the financial community, but it is rare that ‘ethics’ is prioritized on top of the values in a licensing process as it is in the case of “4E” required in the CFP certification requirement.

Professional ethics, in a narrow sense, means complying with the many principles set forth in the Code of Ethics of CFP professionals. In a wider sense, however, it means respecting the legal and moral boundaries of the communities (the country, the local area, the group, etc.) where the financial planner belongs, while they work for the best interest of their clients. All of these mean, in a broad perspective, that a CFP professional must have a strict sense of responsibility when they face a case that is unacceptable by social norms of the community even though the case does not constitute a breach of the Code of Ethics of CFP professionals. To the extent that it is not so easy to abide by, professional ethics can bestow a greater sense of pride when it is fully respected.

Trust is Naturally Built When Ethics are Applied

When CFP professionals fully respect professional ethics, their trust relationship with their clients and colleagues will be ‘naturally’ enhanced day-by-day. Trust can be built in a long haul, rather than in a short term. Thus, while it is desirable that CFP professionals, determined to acquire trust from their clients, are alert to every act or action they take. Planners will learn that if they make a habit of complying with principles and ethics, the trust will naturally be constructed before they know it.

On the other hand, if a CFP professional is asked only vaguely “to respect the professional ethics” or “not to do anything that breaks the principles in the Code of Ethics,” it can only be taken in an abstract or intangible sense. Human beings can feel the impulse to break those general rules for the sake of their own interests. Even though, they may have checked a “Yes” on their eligibility test, they may, in the reality life, act differently. That is a gap between the theory and the reality. And in some cases, planners may turn out to be shrewdly evasive, while in other cases, they may even fail to realize that their act constitutes a breach of ethics. This is why FPSB has set forth very specific Codes of Ethics, guidelines, and rules for CFP professionals; the breach of which can lead to a forfeit of their license. As these requirements provide the basic groundwork for the licensing eligibility, CFP professionals’ activities can remain in the boundaries of ethics, and by doing so, they are also ‘protected by them’ (for their behaving in a way that does not break the code of ethics).

It is true that the FP community in the yet-to-be-developed Korean market still lacks the awareness of the importance of ethics, with the level of sanctions against breaches remaining low. With CFP business progressing further, more experiences and cases need to be achieved and accumulated. Along with them, the awareness of ethics and the trust in CFP professionals will be further enhanced.

Professional Ethics In The Real World

To conclude, here is a case study worth examining:

Kim, a CFP professional, had a nickname, “Mr. Lock,” thanks to his renowned tight lips. He kept the principle strictly of not revealing to others important matters he acquired from varied meetings with his clients. Being known to be a man of discretion and no nonsense, he enjoyed trust from many businessmen and VIP clients who had all sorts of professional secrets.

Then, one of his important clients revealed to him, while intoxicated, an illegal business scandal committed by him, and tried to seek his advice to solve his problem. Being a man with a strict sense of ethics, Kim consulted his lawyer and accountant without revealing his client’s identity in order to help protect his legal rights, and came up with some solutions. Days later, he presented the solutions to him. Then, surprisingly enough, his client got so angry, asking him where he had acquired the secret and told him that he would cut off all the contractual relationships with him.

What Do You Think?

In this case study, what did Kim break or fail to abide by among such elements in the Code of Ethics as “Integrity, Objectivity, Competence, Fairness, Confidentiality, Professionalism, and Diligence”? Or, is it that while he abided by everything in the code, he was just unfortunate enough to lose his relationship with his client? Or, was it just a matter of communication problems with his client, unrelated to the Code of Ethics?

I am most interested in hearing varied opinions from CFP professionals from all over the world.

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