This report discusses the importance of ethics in financial planning and decision making. It includes articles on conflicts of interest, professionalism, and ethical reasoning. The report emphasizes the need for financial planners to adhere to ethical standards and maintain integrity in their work.
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Code of Ethics for Financial Experts0 Title:Code of Ethics for Financial Experts Assignment Name: Student Name: Professor: Date:
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Code of Ethics for Financial Experts1 Executive Summary This abstract summarizes the four articles by June Smith, Frank C. Bearden, Dr. June Smith and Anona Armstrong. The brief descriptions of articles is given Professionalism and Ethics in Financial Planning, Conflicts Of Interest in Providing Financial Planning to Friends, Acquaintances and Relatives, Ethics and Financial Advice: The Final Frontier and Through the looking glass-Identifying the factors influencing ethical decisions making in financial planning organizations has been studied followed by the summary.
Code of Ethics for Financial Experts2 Contents Annotated Bibliography...................................................................................................................3 Article 1...........................................................................................................................................3 Article 2...........................................................................................................................................4 Article 3...........................................................................................................................................6 Article 4...........................................................................................................................................8 Summary..........................................................................................................................................9 References......................................................................................................................................11
Code of Ethics for Financial Experts3 Annotated Bibliography This structured abstract review the topic ofDoes society has an expectation that financial advisers should maintain the high ethical standards in their dutiesthrough research studies conducted by June Smith, Frank C. Bearden, Dr. June Smith and Anona Armstrong. Article 1 In this article, Professionalism and Ethics in Financial Planning authored by June Smith advocates on virtue ethics which implies selecting the course of action that a financial advisor must exhibit which is relevant with this study(Smith, 2009). The misleading and deceptive conduct of lying to clients and employees and compliance with the financial theory is of high interest. A financial advisor ensures appropriate investment selection as well as asset allocation. The financial advisers must act in the best interest of clients. The appropriateness of ascertaining the clients and employees with financial advice requires risk tolerance assessment and providing the remuneration structures. The conflict of interest in offering services to clients and unable to meet with the compliance objectives is dual in nature. Competency standards for the financial advisors must be adequate to equip with the particular skills and offer financial advice to multifaceted financial services environment(Joo and Choe, 2017). The research has revealed young financial advisors to have lesser cognitive, ethical reasoning and at risk of offering the unethical decisions. Additionally, the introduction of ethical training to a particular undergraduate degree, the findings also refer that there can be a special focus in continuing the professional development programs in ethical decisions making. Financial planners must be exposed to ethical education and induced in ethical climate. It can be concluded that accreditation to the professional code of conduct like CFA practitioners can add
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Code of Ethics for Financial Experts4 the level of accountability(Bajtelsmit and Wang, 2018). Access to these designations requires ethics training and continuum professional development in decision making and ethics. By Adhering with ethical standards, financial planning advisors must agree to uphold the financial planning interests for the benefit of society. These ethical standards are developed and advocated through professional standards. As a part of professional commitment, financial planners provide appropriate disclosures and must bound by the ethical standards especially delivering the financial planning to customers. Financial advisors must comply with the globally accepted ethical standards and must adhere in the professional activities. Financial planning requires integrity and honesty in different professional matters. Financial professionals have been placed through the position of trust by customers and personal integrity is an ultimate source. Allowance needs to be made for differences of opinion(Bogan, Geczy and Grable, 2018). Objectivity requires impartiality and honesty. In order to ensure the objectivity of work, managing conflict and exercising professional judgment. Professionalism requires showing respect and behavior with dignity and fellow professionals. Compliance with appropriate rules, professional requirements and regulations requires in-cooperation with peers and enhancement of advisors public image. The financial advisors need to maintain the confidentiality of information and access to those who can authorize it. An association of confidence and trust can be created on understanding the client information. Financial advisors need to have professional commitments in a timely manner and delivering and supervising the professional services. Article 2 In this article, Conflicts Of Interest in Providing Financial Planning to Friends, Acquaintances and Relatives authored by Frank C. Bearden focuses on the interests of financial
Code of Ethics for Financial Experts5 advisors that are encountered daily with relatives or friends(Bearden, n.d.). Newbie financial advisors are required to make the list of friends, relatives and acquaintances for initial business. As an advisor will be growing in the business, the individual will develop the resulting business associations and soliciting referrals is possible. The existing association financial advisor can be direct and honest. The existing conflict can hinder the appropriate advice and objective delivery (Bearden, 2015). This study has been undertaken to obtain clarity on the subject matter of how financial advisors experience when generate business with relatives and how does this have an impact over the industry? The financial advisor must have the clear picture of the elements required for good practice. The perspective will allow the leaders to possibly create the environment which can facilitate the good work. The purpose behind conducting this study is to decipher the conflicts of interests and can be understood and resolved in some ways. The conflict of interest has been considered in every situation where the individual often faces the difficulties in discharging the fiduciary duties which are attached to a given position. There can be a potential or actual conflict between the personal interest of financial planner and employer, organization. There can be existing or potential conflict and need to deliver and implement the financial plan. Friends and acquaintances have been defined with a planner has an existing association. There are few questions which are required to be answered(Cao and Liu, 2017). 1.Doing financial planning with an individual with whom the financial advisor has an existing personal association can be the cause of conflict? 2.Does this preexisting association can impair the high quality of work?
Code of Ethics for Financial Experts6 In order to understand this study, occupation has been taken to define the principle business which requires specialized knowledge, code of ethical conduct and academic preparation. The problem statement of financial planning may pose the hindrance in delivering the quality work. The study has been undertaken for addressing the problems of degree of conflicts that advisors are experiencing(Yeske, 2010). The Board of CFP states the professional conduct standards which address the conflicts of interest issue. Pertinent to this case study, the definition of conflict of interest will include both financial and personal conflicts. This can reasonably occur in the rendering of recommendation and services. The code for professional accountability implies conflict of interest and offers the directive for dealing it with it effectively. A member shall not disclose the conflict of interest. No directive has been issued by any organization to rescue itself due to the rising conflict of interest, but need to act on ethical directives (Rick, 2018). Article 3 In this article, Ethics and Financial Advice: The Final Frontier authored by Dr. June Smith advocates professional ethics is a concern of financial advisors who exercise specialist skills and use judgment in the endowment of advice(Smith, 2010). The concepts must be consistently applied to the framework of financial advisory and avoid the mishaps for the customer who is qualified and regulated as the financial planner (Hellman, 2011). The recognition of the fiduciary association between the individual holding the financial planner, term and client is necessary. The action can reduce the confusion who are seeking professional advice and who wants to meet with the confusion
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Code of Ethics for Financial Experts7 that are searching for the financial advice. The relevant competency standards as described by the act and avoiding the risks cannot be successfully applied towards advisory associations and services(Raffer, 2004). The ethical issues identified in the industry as faced by the financial planners in present role are to act towards the best interests of clients in the face of competing duties and interests. Most of the financial advisors struggle with the professionalism. The perceived conflict which are exist for the financial planners lie between desires to provide the appropriate advice on timely basis. This must be done within the current advisory planners and procure income as well. The ethical issue which has been identified is to determine the client tolerance towards risk that is followed by the obligation to be judgmental and honest. There are few issues in the financial industry, which arise due to the sale of specific financial products within the existing business and this has a larger impact over the independence and quality of advice (Rooney, Mandeville and Kastelle, 2012). One of the common issues is compliance officers have been hampered through the upper management. The customer analysis data suggest behavior must be regulated internally. A sense of difficulties regarding the lack of due diligence by the financial advisors group and lack of responsibility has been observed. The advisory divisions need to ensure financial planners will be held responsible for unethical conduct. A common observation is top management and employees blame unethical nature on the external environment such as pressure from colleagues(Staubus, 2005). There is a greater push towards financial advisors and introducing the professional standards which can lead to understanding of professional standards across the different domains. This may lead to administration of professional standards and understanding the ethical obligations across the different
Code of Ethics for Financial Experts8 sectors. The reforming body must be in action to ban few commissions and move towards service models and mechanisms for customers and resolving the present scenarios and tensions. The proposed reforms and legislative responses can solve the behavioral issues. The legislative changes are required to be associated with organizational culture and enhance the advisor awareness of ethical and professional obligations. The ability of ethical reasoning of stakeholders can ensure due diligence and control. Article 4 In this article, through the looking glass-Identifying the factors influencing ethical decisions making in financial planning organizations, authored by Anona Armstrong suggests financial planning is extremely relevant for the achievement of social and political objectives (Armstrong and Francis, 2018). This also includes the retirement age and selection of superannuation fund. There has been ever increasing need for obtaining the financial advice and ensuring the sustainable lifestyle and healthy retirement years(Oh, Kim and Kim, 2006). According to the recent statistics, there is increased relevance to financial advice to the Australian economy. The objectives are the identification of present patterns of unethical behaviors by financial advisors. The measurement of financial services offered by compliance managers and ethical issues faced through the provision of cognitive frameworks utilized by the financial planners. The present study examines present ethical climate and working culture within a financial planning firm and how this will have the impact on ethical decision making. The key objective is conducting the study on how the financial planners will fulfill the obligations as an emerging profession within a commercial environment. The common perception is ethics are hard for implementing and which are irrelevant to the real world and
Code of Ethics for Financial Experts9 have difficulty in application. Financial planners deal with an extensive range of ethical problems every day, especially with their role and the advice offered to clients. Certain decisions must be made for resolving the problems in a given environment, especially when there are multiple stakeholders. The values and interests of stakeholders are always in conflict. The professional judgments made through financial experts warrant attention and requires identification of factors which influence ethical reasoning. The financial planners must meet with the ability of ethical and professional and ethical obligations. In an organization, managers and officers have a significant role which will influence the ethical context in which decisions are taken. The ethical decision of compliance mangers is responsible for supervising the financial experts in the work. Ethical context within an organization has a significant role to play and influence the financial planners conduct. This ensures decision making consistency in different circumstances and plays a vital role in addressing the unethical behavior. The string ethical background will assist the financial service organization and embed the compliance culture and ensure the ability of meeting with obligations. These will provide the most efficient services in an honest manner and offer quality advice to clients. The concept of financial profession implies ethical complexity levels and decision making ambiguity. This demands the string ethical background which must be articulated in code of conduct. The financial planners must be demonstrating the ethical obligations imposed as a group and must make effective choices while resolving the problems faced in daily practices. Legal obligations and professional ethics exist in isolation. Ethical standards and legal obligations for the financial planners enriched can be complementary implications that can arise in the research.
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Code of Ethics for Financial Experts10 Summary The present report has raised a number of themes in expert ethics for the financial planners, including issues that are associated with the financial products and has an impact on investors. There is a large continuum of conflict of interest within a given framework and advice free institutional bias. To decrease the legal, ethical and regulatory risks that are associated with the external environment, financial planners must be able to identify the legal and ethical issues for resolving the dilemma. The understanding of ethical decision making mechanics requires financial planning enterprises to understand the ethical culture. This is within the framework of advisory business and how this has an impact over the ethical decision making. The present scenario determines the study, which is presently undertaken to study of ethical reasoning of financial advisors and cognitive architecture used for the provision of financial planning. The study observes the contextual factors like the perceptions held by the compliance managers and financial planners of ethical culture and climate. This is done within the financial service framework and has implications for future regulation of financial experts and reliance over the compliance as well as governance mechanisms within the framework of financial service enterprises. Following the rules of corporate governance is must.
Code of Ethics for Financial Experts11 References Armstrong, A. and Francis, R. (2018). Through the looking glass-Identifying the factors influencing ethical decisions making in financial planning organizations.International Corporate Governance Research. Bajtelsmit, V. and Wang, T. (2018). Household financial planning strategies for managing longevity risk.Financial Planning Review, 1(1-2), p.e1007. Bearden, F. (2015). A Study of Recognizing Conflicts of Interest in Pending Financial Planning Engagements.Journal of Financial Counseling and Planning, 26(2), pp.148-159. Bearden, F. (n.d.). Conflicts Of Interest In Providing Financial Planning To Friends, Acquaintances And Relatives. Bogan, V., Geczy, C. and Grable, J. (2018). Welcome to the inaugural issue of Financial Planning Review from the co-editors.Financial Planning Review, 1(1-2), p.e1009. Cao, Y. and Liu, J. (2017). Financial Executive Orientation, Information Source, and Financial Satisfaction of Young Adults.Journal of Financial Counseling and Planning, 28(1), pp.5-19. Hellman, N. (2011). Chief Financial Officer Influence on Audit Planning.International Journal of Auditing, 15(3), pp.247-274. Joo, S. and Choe, H. (2017). : Financial Planning Revieww 1000 (Review of Personal Financial Planning Research: 10 Years of Financial Planning Review).SSRN Electronic Journal. Oh, K., Kim, T. and Kim, C. (2006). An early warning system for detection of financial crisis using financial market volatility.Expert Systems, 23(2), pp.83-98. Raffer, K. (2004). International Financial Institutions and Financial Accountability.Ethics & International Affairs, 18(02), pp.61-77.
Code of Ethics for Financial Experts12 Rick, S. (2018). Tightwads and spendthrifts: An interdisciplinary review.Financial Planning Review, 1(1-2), p.e1010. Rooney, D., Mandeville, T. and Kastelle, T. (2012). Abstract Knowledge and Reified Financial Innovation: Building Wisdom and Ethics Into Financial Innovation Networks.Journal of Business Ethics, 118(3), pp.447-459. Smith, D. (2010). Ethics and Financial Advice: The Final Frontier. Smith, J. (2009). Professionalism and Ethics in Financial Planning. Staubus, G. (2005). Ethics Failures in Corporate Financial Reporting.Journal of Business Ethics, 57(1), pp.5-15. Yeske, D. (2010). Finding the Planning in Financial Planning: An Integrative Framework for Strategy-Making by Financial Planners.SSRN Electronic Journal.