In viewing the New Year already one month old, we as members of NAIFA have a number of areas of ethical focus as we begin to engage 2022. I thought a good beginning in reviewing these would be to take a brief review of the obligations of our NAIFA Code of Ethics for the new year, and how we have engaged these obligations. We’ll begin at the beginning with the first obligation.
1) To help maintain my clients’ confidence and protect their right to privacy.
At first reading, this may seem to be a small obligation, until we realize this means not to discuss our clients’ private financial matters, even among associates, unless done so in confidence. Like several other obligations, this seems to be a small matter, but it really isn’t.
2) To work diligently to satisfy the needs of my clients by acting in their best interest.
The second obligation we accept is the one that introduces our functioning in a fiduciary capacity with clients. This involves focusing on client needs and the best means to fulfill these in accord with client interests.
3) To present, accurately and honestly, all facts essential to my clients’ financial decisions.
The third obligation is the information that we provide that is fundamental to a client’s financial decisions. This means all pertinent information.
Oftentimes a client is aware of what he or she seeks to do but does not realize the information needed to enact these decisions. This obligation may mean expanding our own knowledge to provide information to the client about his/her/their financial decisions.
4) To render timely and proper service to my clients and ultimately their beneficiaries.
While a financial advisor periodically may have time constraints due to a full schedule, we need to continually be prioritizing our time allocation to client and beneficiary needs, which may be very time-sensitive.
5) To continually enhance professionalism by developing my skills and increasing my knowledge through education.
Professional education means constantly expanding our threshold of professional knowledge. In doing so, we must be constantly stretching our comfort zone of knowledge as it applies to the services we provide. This often means being initially uncomfortable with new professional information.
6) To obey the letter and spirit of all laws and regulations which govern my profession.
None of us can abide by the letter and spirit of laws and regulations without continually expanding our understanding of this critical professional information. This also means constant refreshers of laws and regulations, along with the facts and spirit of these, and then implementing these laws and regulations in the advice and implementations we use with our clients.
7) To conduct all business dealings in a manner that would reflect favorably on NAIFA and my profession.
In all our professional behavior, we must act in accordance with the NAIFA Code of Ethics to provide a favorable impression upon our professional actions and our organization.
8) To cooperate with others whose services best promote the interests of my clients.
Clearly, this involves those persons who are what we could call adjacent or supporting professionals, who often also serve with a fiduciary standard, such as attorneys and CPAs.
9) To protect the financial interests of my clients, their financial products, and my profession, through political advocacy.
This provision simply means we should invest our time in organizations that support products and services, such as the Coalition for Medicare Choices (Medicare Advantage Plans), and other groups, including our volunteers that speak to our representatives at the state and federal level, such as the NAIFA Congressional Conference, May 23-24, 2022.
And so, our Code of Ethics directs our behavior and spirit as we seek what is useful and fulfilling within our profession for our clients.
Frank C. Bearden, PhD, MSM, CLU, ChFC, is Managing Member at Frank C. Bearden LLC, author of "The Subtle Influence: Conflicts of Interest in Financial Planning", and a regular contributor to NAIFA's Advisor Today blog.