“The fact that man knows right from wrong proves his intellectual superiority to the other creatures; but the fact that he can do wrong proves his moral inferiority to any creatures that cannot.”—Mark Twain

In Iasi, Romania, I met an engaging 17- or 18-year-old woman named Sophia. She is a Ukrainian refugee. Sophia escaped the war in Ukraine along with her mom, sister, and aunt. Her father is serving in the military.

Sophia attended our seminars on Emotional Intelligence. The reason she requested to meet with me was to ask me, “How do I choose the right university?” And, “How can I get admission to a university in America?” I helped her think through these questions and even supplied resources to help her discover universities in America that have special programs for Ukrainian refugees.

Sophia wants to study Web Design. She knows HTML, Java, and Photoshop.

She is a ballroom dancer and model. When I asked her about the purpose of life and her worldview, Sophia said she has not thought about faith or God much. She categorically said, “There is really no right or wrong, nor is there really anything truly good or bad.”

I challenged this:

“Sophia! I am so glad to hear you say that! Poor Russia is getting criticized by everyone because they attacked Ukraine. You at least know they are perfectly within their rights since there is no right and wrong.”

This shocked her. Which was the point.

Nihilism is a philosophy that is increasing in popularity among young people the world over. The definition of nihilism is:

• “a viewpoint that traditional values and beliefs are unfounded, and that existence is senseless and useless;
• a doctrine that denies any objective ground of truth and especially of moral truths”¹

Sophia is flirting with nihilism but, so far, she has only accumulated a shaky framework of opinions.

Right or Wrong
In November, 2023, NY Representative George Santos (who represented parts of Queens and Long Island) was the subject of a Congressional investigative panel charged with researching a myriad of accusations of “wrong-doing.” In fact, Santos faced a 23-count federal indictment that includes allegations of stealing donor identities, using their credit cards to make thousands of dollars of charges, and directing some of the money into his own account or into his campaign fund.

The scandal-plagued, federally indicted freshman representative from New York was expelled December 1, 2023, from the House of Representatives by a 311-114 vote, including 105 Republicans, to become only the sixth House member to be removed in U.S. history. (There have been over 11,000 house members in U.S. history.)

Question: Why should anyone care what Santos did or didn’t do if there isn’t any right or wrong?

Point: In a world that appears to be dismantling the traditional understanding of right and wrong, an independent financial professional (IFP) must continually work hard to conduct herself properly in order to maintain a clear conscience and remain professionally ethical.

Fascinating Etymology
The word “wrong” has an interesting history. Its origins have several sources:

• Old English, meaning ““twisted, crooked”
• Old Norse, meaning “crooked, wry, wrong,”
• Middle Dutch, meaning “sour, bitter,” (literally, “that which distorts the mouth”)²

(“Wry” is used to describe someone’s face that is twisted into an expression of disgust.)

Wrong=twisted, crooked, wry, sour, bitter; that which distorts the face or mouth.

(Conversely, the word “right” has this historical meaning: “to move in a straight line,” and “not bent.”)³

Question: Who gets to decide what is straight, unbent, or pleasant tasting?

The “Wrongs” of Independent Financial Services
In financial services, we operate in a world that still believes there are such things as right and wrong, good and bad. Our clients expect us to speak and behave with integrity. There are of course many layers of governance and standard-setting. Compliance reaches as far as it can, and regulators contribute to oversight, but at the end of the day we must manage ourselves to high ethical and moral standards.

The sad reality is that as an IFP it is easy to deceive, ignore, or even cheat clients every day and not get caught. The reason is because government oversight of IFPs is highly fragmented, and regulators from the Federal and State governments are not always in sync. There isn’t a central database documenting IFP misconduct.

According to the Stanford Institute for Economic Policy Research (SIEPR):

“There are over 650,000 registered financial advisers in the United States helping manage more than $30 trillion of investable assets.”⁴

“One in 13 financial advisers have a misconduct-related disclosure on their record.”⁵

“Misconduct is geographically concentrated. The highest rates of misconduct are in areas with more elderly and less-educated populations.”⁶

According to the U.S. Securities and Exchange Commission (SEC), here are just a few “wrongs” that IFPs perpetrate:

• Fraudsters may misrepresent their education.
• Fraudsters may lie about having been awarded honors that they have not received or that do not even exist.
• Fraudsters may pretend to hold certain professional titles to suggest that they have certain expertise or qualifications.
• Fraudsters may inflate their professional experience.
• Fraudsters may pretend that they have a certain position or title at a company.⁷

“Examples of misconduct included paying to settle customer disputes, being terminated after allegations of improper behavior, being held liable in civil litigation, or receiving criminal or regulatory sanctions.”⁸

Point: While we ourselves know if we are abiding by moral, ethical, and legal standards, we can sometimes fool others; and even if we get caught, we can still find ways to keep working in financial services.

Practicing in a Straight Line
It is each IFP’s free opportunity to create a reputation that aligns with personal character. It is also possible to hold ourselves to high standards of character. We can impact our clients’ facial expressions and the orientation of another person’s mouth to reflect positively on our work when our name is mentioned.

It is important to remind ourselves from time to time (maybe annually) of the commitments we individually make to ascribe to high ethical standards. A great place to start is reviewing the CFP Board’s Code of Ethics and Standards of Conduct.⁹

Another great barometer of our personal integrity is the extent to which we are willing to be held accountable by others. An accountability partner can ask us the hard questions.

Or we can simply check ourselves.

Practical steps:

• Review what can be discovered about your educational and professional background. Is it accurate?
• Are there discrepancies regarding your publicized background, such as conflicting information or dates?
• Are you confident enough to direct potential clients to sources where they can independently verify your credentials and professional claims with reliable sources, such as National Association of Personal Financial Advisors (NAPFA), Investment Adviser Public Disclosure (IAPD), FINRA BrokerCheck, and the web sites of state securities regulators?
• It is possible to operate 100 percent of the time above board and still experience a consumer complaint. If this is your experience, are you more comfortable hiding the fact or disclosing it and providing context and eventual resolution?

In general, a wise IFP invites every client to engage in open communication, to ask questions, and to demand transparency. To behave with transparency, do the following:

• Disclose all aspects of compensation.
• Go beyond recommending opportunities that are merely “suitable,” and choosing instead to specifically recommend only those that are in the client’s “best interest.”
• Take the time to explain your thought processes and investment strategies.
• Entertain all of your clients’ ideas, allowing them to have a say in their own financial future.
• Explore ideas and educate the client about why something might be plausible or perhaps inadvisable.

Here are great ways to give assurance to prospective clients:

• Explain how you make your money.
• Describe your approach to financial planning.
• Delineate the financial planning services that you offer.
• Clearly define the particular type of clients you normally work with.
• Make it known if you enforce account minimums.
• Provide a checklist of the information prospective clients need to bring in order for you to develop a financial plan.
• Notify all prospective clients regarding how many times and how often you will want to meet with them.
• Let all clients and prospective clients know if you are willing to collaborate with their other advisors like CPAs or attorneys.

Summary
While traditional social constructs of right and wrong appear to be in flux, or eroding, those of us in financial services must diligently strive to operate in ethical, moral, and legal ways.

How much better to create sweet experiences for clients rather than leaving them with a sour or bitter taste in their mouths!

In his book, A Failure of Nerve: Leadership in the Age of the Quick Fix, Edwin Friedman wrote:

“Leaders must always focus first on their own integrity.” This is also true of IFPs.

Footnotes:

1. https://www.merriam-webster.com/dictionary/nihilism.
2. https://www.etymonline.com/word/wrong.
3. Ibid.
4. https://siepr.stanford.edu/publications/policy-brief/misconduct-under-microscope-examining-bad-behavior-financial-advisers.
5. Ibid.
6. Ibid.
7. https://www.sec.gov/enforce/investor-alerts-bulletins/ia-credentials.
8. https://www.policygenius.com/personal-finance/news/how-to-vet-financial-advisors/.
9. https://www.cfp.net/ethics/code-of-ethics-and-standards-of-conduct.
10. A Failure of Nerve, Revised Edition: Leadership in the Age of the Quick Fix, by Edwin H. Friedman, Church Publishing; 10th Anniversary edition (May 1, 2017).

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