The advice and research community should focus on being open and truthful about their business models, rather than trying to eliminate finite conflicts in areas such as fees according to Deen Sander, ethics and professionalism leader at Deloitte and former CEO of FASEA.

Speaking on a live session to open the Professional Planner Researcher Forum 2020, Sanders opened up about the ethical responsibility providers have to consumers and how that meshes with Standard 3 of FASEA’s code of ethics, which takes a hard line on conflicts.

While careful not to name FASEA or criticise his former employer, Sanders made it clear his personal ethical lens takes a more holistic approach than FASEA’s exhortation for advisers to not “advise, refer or act in any way” where a conflict exists.

Rather than picking at perceived conflicts around remuneration, he intimated, the focus should be on eliminating misleading service provision.

“I was never as concerned with the issue of fees or commissions or how they were paid as I was with the utter, utter untruth of many of the financial advice business models,” Sanders said.

“I believe it’s a far greater ethical failure to tell your clients you’re offering them a bespoke service, tailored uniquely to them and charging $60,000 for it, when it’s the same templated advice that you’re rolling out for every client,” he continued. “That to me is a much greater evil than whether you’re charging 2 per cent, 2.5 per cent.”

Once you’ve got an ethical business model in place and ethical considerations are embedded into business processes, Sanders said, the issue of payment dissolves.

“It disappears because that’s just a proxy people use to say ‘this is unethical, it smells fishy’,” he said.

Selling de-risking

The perspective Sanders takes with advisers also applies to the researchers and research houses who assess products and formulate APLs.

“When I think about ethics in terms of research houses my first question is always: ‘What is it that we’re selling?’ Are we selling objective knowledge about a particular product? Are we selling an objective assessment of a marketplace within a sector?”

These perspectives miss the mark if researchers take the same honesty lens that underpins ethical advice enterprise, he reckons.

“I personally don’t think that’s what’s being sold,” he said. “I personally think what’s being sold is the idea that we’re de-risking. We’re all playing a role as participants in that particular value chain and offering a role to de-risk the value chain. Or elements of it.”