Other Voices

The financial services industry needs real leaders

Vision statements, codes of ethics, and rules and regulations have failed to serve as effective road maps for ethical discernment

May 17, 2015 @ 12:01 am

By Don Trone, Mary Lou Wattman and Steve Branham

Leadership researchers from around the world — in every industry sector and domain — have seen a dramatic shift in the attributes society prefers to see in a leader. The top-down, hierarchical command-and-control style is no longer favored for every leadership situation. Character is now more important than charisma.

The financial services industry needs to take note of this phenomenon.

Consider that our industry is suffering from a severe deficit in ethical leadership. When you examine the Chartered Financial Analyst Institute's 2015 Global Market Sentiment Survey, two statistics stand out: 96% of respondents indicated there is a lack of trust in financial services, and 63% believe a deficit in ethical culture is the leading cause.

Mission and vision statements, codes of ethics, and rules and regulations have failed to serve as effective road maps for ethical discernment. Attempts to define higher professional standards in terms of “fiduciary” also will likely fail.

Recently, we came across a new term in the Urban Dictionary — ethotic — defined as an adjective relating to ethos.

If you're not familiar with the word ethos, the ancient Greeks used it to define the link or continuum between three elements: behavior, core values and decision-making. The modern expression of ethos is the continuum between leadership, stewardship and governance.

Now we can say that great individuals and organizations that demonstrate a well-defined ethos are considered to be ethotic. And that ethotic leadership is the ability to inspire and the capacity to serve others by having a well-defined framework that integrates leadership, stewardship and governance.

We believe ethotic leadership describes the style of leadership that can best serve the financial services industry. In turn, we have identified an inventory of 10 attributes that can be used to measure an ethotic leader. We would encourage the industry to consider these attributes when making key leadership assignments by choosing leaders who are:

1Aligned: Have character, competence and courage. They are passionate and disciplined about protecting the long-term interests of others.

2Attentive: Are active listeners and observant. They can promote inclusiveness and gather information about a particular situation and use it to engage others and to foster shared reflections.

3Agile: Are not afraid to be vulnerable and recognize that they don't have to win every argument to be in control. They are able to absorb more risk and be more resilient.

4Adaptive: Have the capacity to evolve. They are able to pivot as new ideas and challenges are presented.

5Accepting: Can break down stereotypes, be inclusive of others and be more transparent about their feelings. They can accept uncertainty with fortitude and calm.

6Articulate: Are genuine in both their written and spoken words and are able to adapt and customize their communications to their audience. They can be inclusive of contentious points, yet also be affable and capable of demonstrating a sense of humor.

7Ardent: Are able to keep a sense of perspective in the face of adversity. They can see optimistic outcomes despite known risks.

8Action-oriented: Are comfortable being a champion of others' initiatives. They may be the smartest people in the room, but won't have to prove it. They have a sense of vision and feel confident moving forward when others want to gather more facts.

9Accountable: Can generate a greater return on investment because they are able to do more with less and collaborate with team members who have diverse talents and ideas. They focus on issues that can be controlled and won't get hung up on missed opportunities.

10Authentic: Perhaps most importantly, we need leaders who are connected with their sense of purpose, who are passionate about their life's work and who have a well-defined process for managing key decisions.

We can better address the ethical decision-making deficiencies of our industry by focusing on the attributes of ethotic leadership. Whether we're talking about the senior-most management positions at a money management firm, bank or wirehouse, or the role of an individual broker or financial adviser, we need to develop and recognize leaders who have the ability to be the point of inspiration for moral and ethical decision making.

Don Trone, Mary Lou Wattman and Steve Branham are co-founders of 3ethos. The company conducts original research, assessments, training and coaching. Mr. Trone and Ms. Wattman recently released a book, “LeaderMetrics: What Key Decision-Makers Need to Know When Serving in a Critical Leadership Role.”

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