Advisers can help themselves adapt to the new Code of Ethics by tapping into the creative side of their thinking when it comes to ethical dilemmas according to Tracy Wilcox, the UNSW Business School’s academic director of postgraduate programs.
The challenge of acting ethically in an unethical world is one that most people struggle with, Wilcox says, but even moreso for advisers who now have a professional code on top of the responsibility for their clients’ financial prosperity.
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There are external pressures, she says, that will inevitably force advisers to make uneasy decisions. Not every adviser will see these pressures in the same way, but the ones that take a broader and more open perspective will tend to act more professionally.
“Seeing an ethical dilemma depends on moral imagination,” Wilcox says. “It’s about creativity and putting yourselves in the shoes of other people and seeing what it’s like from other perspectives.”
A key part of the ethical decision-making process, she believes, is having the capacity to see a bigger question in a small issue. For example, she says, one might ask themselves what would happen if everyone took a particular course of action that an adviser was considering.
Technical and Ethical Uncertainty
While the Code of Ethics was criticised when it was released for not having enough prescriptive guidance, Wilcox says FASEA is trying to get advisers to think of who they are and how they operate as professionals.
Open-ended edicts like standard three, which tells advisers not to “advise, refer or act” if a conflict exists are meant to be actively interpreted, she says.
“Often when we think about the standards we get this compliance mindset and think of the letter of the law,” she says. “But one of the things that makes financial planning a profession is technical and ethical uncertainty.”
Indeed, FASEA chief executive Stephen Glenfield has implored advisers to read the code “as a whole”, and to put the “spirit” of the standards into context. This agency to apply the ethics framework to individual practice is key, Wilcox explains.
“The uncertainty is what distinguishes the profession from a job,” she says. “I’m a strong believer in giving stakeholders agency to make their own choices because the code is about the spirit of the law, not the letter of the law, and the intention of the code is to give that agency.”
The professor acknowledges that getting comfortable with a Code of Ethics that requires active interpretation may take time. She understands, also, just how high the stakes are for advisers.
“The other thing about professionals is that they can be sanctioned,” Wilcox says.
While the job of policing the ethics code is being performed by licensees in a caretaking role for now, the government’s eventual single disciplinary body will likely take a more formalised approach. In the meanwhile, advisers will have the opportunity to get used to the agency FASEA is asking them to take.
“Getting comfortable with that agency might take another year,” she says. “It’s not going to be resolved in the next six months.”
Along the way, she adds, the code itself may evolve into something different than the one we see before us.
“It’s only as you put things like this into practice that you begin to see how they operate,” she says.
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