How much disclosure should certified financial planners have with their clients? In the article, “Is the Fiduciary Standard a Joke,” Allan S. Roth discusses whether financial advisors should focus on their own profit-making or act upon the interest of their clients. While it is not in their best interest to reveal all means of financing to their clients, CFPs still hold a duty to have their clients informed. Yet, most of today’s CFPs still keep much information hidden from their clients, leaving them uncertain of where their own money is flowing.
Recently, a number of certified financial planners have been convicted of “double dipping,” through which CFPs took commissions from their clients multiple times; the victims of this practice insist the need for a change in the system to which CFPs disclose all transactions of their clients’ capital and have them fully aware of where their money is flowing.
It is always an uneasy task to find a balance between ethics and profits. It is at times true that one can make more money when he or she neglects ethics and focuses on his or her own money-making. Yet, in an ideal world, those who advise on ethics and act upon the interests of their clients will gain good reputation, which in turn will help them become more prosperous both as a businessman and a human being.
A nice find Eunice! I really like your perspective on the business ethics. I agree that in long term, business professionals and companies will be able to build a healthy customer relations and reputation and result in a higher overall profit if they can show that they are practicing ethical values for the good of their customers! Their marginal profit might become lower but their market share would increase. Also, like you said, as a “human being”, advisers should act morally and not cheat on the people who put so much trust into them! 🙂