Ethical approach a business opportunity
New Zealand financial advisers are increasingly willing to consider the ethics of how they run their business, one specialist says.
Thursday, June 18th 2015, 6:00AM
Philippa Foster Beck, director of the UK-based Institute of Business Ethics, was in Auckland to present to the combined IFA/PAA conference last week.
The IFA runs business ethics courses developed by the Institute.
Foster Beck said she had been coming to New Zealand every year for the past five years and had noticed a change in attitude. "People are now much more interested and willing to listen. The number in the room willing to listen to me has increased."
But she said there was always more work that financial advisers could do to improve their own business ethics. "Organisations need to fight complacency."
Advisers needed to be more aware of their role and how they dealt with conflicts of interest, she said. "Upping their game and recognising that the dial has turned and the world has moved on. If they don't move with the times, they might potentially find themselves falling foul of new regulation."
The FAA review was an opportunity to engage and improve the ethical standing of the industry, she said.
One of the topics up for review is commission and Foster Beck said it was a difficult one for advisers to navigate.
While other countries are moving away from allowing commission, Foster Beck said they were acceptable if the remuneration model was clearly communicated to clients.
“If your business is commission-based you have to make 100% sure that it is clear so there is no misunderstanding. That misunderstanding creates an environment for misselling.”
Advisers should put themselves in their clients' shoes and consider whether things could be explained better, she said.
A more ethical approach would pay off for a business' bottom line, she said, as happy clients referred their advisers to their contacts.
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