Ask the Ethicist

Dan Candura answers readers’ questions on the ethical dilemmas financial advisers face.

Judging the presidential candidates by the CFP Board's standards of conduct

This is the choice we all face on Nov. 8 — two flawed candidates — neither of whom represents the principles we aspire to ourselves

Sep 30, 2016 @ 4:04 pm

By Dan Candura

For the last year whenever I spoke to groups of CFP professionals across the United States I conducted an informal survey of the audience's preferences in the upcoming presidential election. I use a tool that allows participants to answer anonymously using their smartphones or tablets. It is intended to be an icebreaker and a way to demonstrate how the polling software will be used during the rest of the ethics course. As you would expect, results varied depending on the group. Early on there were many candidates and the results were scattered. As the field narrowed and the two frontrunners emerged, several themes emerged.

Real discomfort with the choices emerged as audience members asked for a “None of the Above” option. So in addition to the Democratic and Republican nominees, I added the Libertarian and Green party candidates. These third party choices gave the 10 to 20% who were dissatisfied with the traditional choices an outlet for their frustration.

With the election approaching, it isn't uncommon for a gadfly in the group to make some interesting comments when the poll appears on the screen. They ask how the candidates would measure up to CFP Board's rigorous standards of professional conduct. There isn't time during a CFP ethics course to answer that question since the Certified Financial Planner Board of Standards Inc. has strict requirements regarding the content of ethics courses. This column will try to address the issue by looking at the principles that guide the behavior of advisers. I believe these principles to be the aspirational ideals that are common to most of us in the advisory world. But since I provide CFP ethics training, I will focus on CFP Board's principles and code of ethics.

Integrity: “Integrity demands honesty and candor which must not be subordinated to personal gain and advantage.”

Neither candidate is a paragon of integrity. There is an entire industry setup to fact check their statements, and they often contradict themselves from one day to the next.

Objectivity: “Objectivity requires intellectual honesty and impartiality.”

Both candidates represent party platforms designed to represent the beliefs of their constituents. The political process that created these platforms is far from an objective analysis. Rather it is a battle of special interests, campaign contributions and back-room maneuvering.

Competence: Competence means attaining and maintaining an adequate level of knowledge and skill, and application of that knowledge and skill in providing services to clients.”

Both candidates claim to be fit to assume the role based on their past experiences. But those experiences vary. Is success as a real estate magnate and reality TV star what it takes to be effective leading the most powerful country in the world? Is it enough to have served in government even if most of the experience is appointed or ceremonial? Undoubtedly both candidates are well-educated and smart. Maybe we need a list of skills like the CFP Board's job analysis?

Fairness: “Fairness requires impartiality, intellectual honesty and disclosure of material conflicts of interest. It involves a subordination of one's own feelings, prejudices and desires so as to achieve a proper balance of conflicting interests. Fairness is treating others in the same fashion that you would want to be treated.”

Maybe we can't expect either candidate to be impartial since by definition each represents a competing agenda, but we certainly ought to expect that they avoid conflicts of interests and mitigate any that are unavoidable. The actions of each candidate concerning the candidate's charitable foundations cause both to fail this attribute.

Confidentiality: “Confidentiality means ensuring that information is accessible only to those authorized to have access.”

While one candidate admits that she may have unintentionally compromised the security of classified documents in order to make it easier for herself to communicate, the other encourages hackers both domestic and international to continue to invade the confidential information of private citizens and government officials. Neither gets high marks for this principle either.

Professionalism: Professionalism requires behaving with dignity and courtesy.

The smear tactics of both campaigns. Enough said.

Diligence: “Diligence is the provision of services in a reasonably prompt and thorough manner.”

Both candidates demonstrate a reluctance to answer questions and supply documents that are needed by voters to evaluate their actions. Both tend to obfuscate and delay in an attempt to avoid accountability.

Is it any wonder that each candidate's unfavorable qualities are the highest we have ever seen in a national campaign or, that there is such a lack of enthusiasm among advisers for either candidate? But this is the choice we all face on Nov. 8 — two flawed candidates — neither of whom represents the principles we aspire to ourselves.

If you want to share your preference for the next president, you can do so here.

Your vote is anonymous and I will report the results in next month's column.

Dan Candura is founder of the education and consulting firm Candura Group. Write to him to submit a question. All submissions will be treated confidentially.

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