2008 Summit Panel Topic Two: What are best practices in managing ethical dilemmas inherent in client advisor relationships?
Panelists:
- Paul Voss, President, Ethikos, LLC
- Randy Hain, Managing Partner, BellOaks
- Paul Paris, Managing Principal, Aarons, Grant & Habif, LLC
- Chris Cooper, Executive Vice President, Private Banking Manager, Georgian Bank
Summary of session:
The panel began by developing a definition for an ethical dilemma. Chris Cooper believes that ethical dilemmas arise when corporate objectives are not in alignment with the client objectives. Paul Paris expressed concern for firms that chase new revenue opportunities which create conflicts of interest with other services offered. Randy Hain reminded us that ethical dilemmas are often caused not by the advisor but by a client who acts outside of appropriate ethical boundaries and thereby forcing the advisor into a professional quagmire. Paul Voss introduced the audience to the concept of ethics being about business decisions and not about morality. The critical question: “How ought we handle the given situation,” is the keystone ethical question and the issue at hand often results from a double-bind, between-rock-and-hard-place confrontation. Dr. Voss also shared his belief that the current economic crisis was caused by faulty business judgment resulting from incentive systems that rewarded the wrong behaviors and cascaded into a series of unintended consequences.
Current economic chaos will almost certainly affect future ethical behavior. Here is what the panelists predict:
- Companies and professional services firms with strong ethical cultures will continue to support strong ethical values.
- Companies and professional services firms without strong ethics-centric cultures will be tempted and challenged when it comes to doing the right thing. Desperation for new business will widen ethical gaps.
- The public is increasingly attuned to the importance of working with ethical firms and is gaining a better understanding of how ethical business cultures impact finished products. The public will demand transparency from companies as a prerequisite to doing business and buying their products.
- Ethical values might soon represent a significant and visible point of competitive difference when firms are attracting clients as well as recruiting employees. Ethical firms will increasingly be challenged to demonstrate their positive cultural strength publicly through their thoughtful community involvement.
Five ideas were developed that should be embraced and implemented by all companies:
- Identify ethical dilemmas, both existing and potential, and discuss with employees and resolve or plan for each one.
- Establish strong ethical standards and share them directly and consistently with all members of the firm or company.
- Have an ongoing system to identify, surface, track, measure and monitor adherence to the firm’s ethical standards.
- Make sure the company has “the right people on the bus.” Hire for ethical behavior and act quickly and visibly to remove those who falter from it.
- Finally, firms demonstrating a commitment to ethical standards in client development need to communicate this to the outside world, in a believable and compelling way. Referrals, client testimonials, and strong relationships will be more important in demonstrating ethical behavior.