Take the time to stop and think, and be aware of your own biases – these are the two principles that can help advisers develop ethical habits and navigate their obligations under FASEA’s new Code of Ethics, according to Dr Tracy Wilcox, UNSW Business School’s academic director of postgraduate programs.
With advisers for the first time undertaking exams to test their understanding and practical application of ethics in light of their statutory obligations under a new code from January 1, Wilcox suggests advisers start first with their ethical mindset instead of thinking about FASEA’s Code of Ethics as another set of rules.
“Ethics is about practical reasoning, it’s about how do we think about something and apply the tools to a specific situation,” Wilcox, who has helped design UNSW business school’s ethics program, told delegates at the SMSF Association’s national conference on Wednesday.
Wilcox joined Colonial First State’s Craig Day during a session where the pair picked apart real life ethical scenarios. At the end of February, Professional Planner will launch its own ethics & professionalism podcast series in which six experts will weigh in on the resolution of ethical scenarios submitted by readers.
Wilcox outlined the three ethical frameworks which she encourages individuals to use in their “ethics tool box”. Consequentialism (Utilitarianism), Virtue Ethics and Deontology are the three ethical philosophies advisers will likely draw on as they approach their obligations under the new Code, Wilcox noted.
“The important thing about ethics is not necessarily about having the correct answer, it’s about having something I can justify. It’s about taking time to stop and think,” she said.
Acknowledging our own cognitive biases and how these biases might influence advice outcomes is an important part of developing ethical habits for advisers, Wilcox continued.
“In our daily life we are influenced by our cognitive biases, we are influenced by the mental models we adopt and the way we view the world. We are influenced by the assumptions we make which are taken for granted and we are not even aware we are making them, so they’re unconscious. The biases and assumptions make you look at a situation in a particular way and you don’t see alternatives,” she described.
“Part of ethical thinking,” Wilcox said, “is being aware and stopping and saying, ‘how have I arrived at this decision taking into account my biases, should I just take a moment to stop and think, should I be more reflective about my assumptions?’”
Further, considering the implication and impact on the community, beyond the individual and even the client will be an important evolution in the way advisers think and they develop ethical habits, she continued.
“There is always a technical way to get around a rule. But if we all think of it that way, what does it tell society about our profession?”