DALLAS -- Would planners act unethically if they thought they wouldn't get caught?

Eric Sawyer, CFP and director of planning at Texas Tech University, pointed to a troubling statistic during a session on ethics at the T3 conference.

A 2013 survey of financial services professionals by law firm Labaton Sucharow found that 24% of respondents admitted that, given the right reward, they’d likely do something illegal if they could get away with it, Sawyer told advisors.

While most advisors aren't bad actors, there a few ways planners can prevent this mentality and keep themselves out of unethical situations, Sawyer said.


Advisors should try to keep things simple, he said. “We like simplicity but we don’t keep things simple,” Sawyer said in jest.

The more simple the planning process is, the less likely it is that an advisor will end up in unethical situations. When complexities are added to financial planning there is more room for confusion which can lead to unethical behavior, he argued.


Sawyer also recommended that advisors create processes or habits that ensure ethical behavior. “Ethics is a muscle,” he said. “I’ve come to the conclusion that when people don’t do things for us in a professional way, I don’t think it’s because they don’t care. I think it’s because they haven’t practiced.”

The stresses of daily life can get in the way of intelligent practices, but reinforcing positive behaviors to the point that they become second nature can help keep behavior in check, Sawyer said.

One important example is recordkeeping. Making it a habit to keep thorough records can help keep advisors out of trouble. Just the act of keeping records properly makes advisors more likely to practice ethically because the process of doing this task becomes uniform.


“Stop hanging out with the 24% we mentioned earlier,” Sawyer joked. In addition to creating a habit out of ethical practices, advisors should surround themselves with likeminded people, he said.

“Surround yourself with folks that you trust and respect,” says Sawyer. “You find yourself wanting to do the same things they do.”

Ultimately, ethical behavior is about clients. “People want to engage in [financial planning] and they want someone they can trust,” he said. “Essentially, the less ethical we are, the less engaging we are at times, the more regulatory problems we’re going to have."

Read more:

Register or login for access to this item and much more

All On Wall Street content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access