Ask the Ethicist

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

Ask the Ethicist: What happens when an adviser gets caught in the middle of divorcing clients?

There are several ethical breaches in this tale, and not all of them land at the feet of the adviser

Feb 1, 2017 @ 2:21 pm

By Dan Candura

Q: I married my husband a few years ago. It was a second marriage for both of us. Since I was moving across country after the marriage, we decided to use the financial adviser with whom he already had a strong relationship. His adviser was younger than mine and had several credentials after his name. Even though I had far more assets than my husband-to-be, I was comfortable making the change to a new adviser.

Unfortunately, the marriage did not work out and we split up recently. We used a divorce mediator to assist in the process, and we settled the financials with me providing him with a generous payment in lieu of alimony. I earn much more than he does. I am not writing because I am unhappy with the payout. I do feel it is generous, but I can afford it and I had ample opportunity to raise any objections when we met with the mediator.

My question revolves a text that I found on a phone that my ex left when he packed his stuff. I could never get him to put a password on his phone. He didn't like having to input the code every time. The text in question was one of the last that he received just before we had our last meeting with the mediator. It was an exchange between my ex and our financial adviser. It appears my husband shared my financial offer with him and asked for his opinion. The reply was “Take the money, man. This is a really good offer.” My ex wasn't convinced and texted again, “R U sure?” The reply from our adviser was, “Take it Now. Don't walk to the meeting. Run.”

Is this a breach of ethics by the adviser? I feel like he violated my trust by not letting me know that I was being too generous.

A: There are several ethical breaches in this tale, and not all of them land at the feet of the adviser, but some do for sure. He owed you a duty of loyalty equal to that which he owed your ex. The fact that he had been his adviser longer is irrelevant. Once you became his client — either individually or as a couple — he had an undivided obligation to act in your joint interests. He cannot choose sides. He should not have provided advice to one of you that would also have an impacted the other. The adviser could have declined to offer advice to your ex until after you were no longer a client. Or, he could have referred your ex to another adviser. If he chose to offer advice, he needed to provide that advice to you at the same time as your ex. Instead, he put your ex-husband's interests ahead of yours and did so in a way that would possibly escape scrutiny by texting instead of creating a paper trail.

Your ethical breach occurred when you opened your ex-husband's phone and started reading his messages without his consent. The fact that he abandoned a non-secure device might serve as a legal defense but does not mitigate that you gained the information unethically. All of us prefer that others ask us before looking though our electronic devices, our briefcases, our dresser drawers and closets. It is simply the right thing to do.

(More: Ask the Ethicist: How to make a U-turn after retirement)

There is some justice in the fact that you were not unhappy with the settlement until your discovery. You obviously should not use this adviser any further and you may consider filing a complaint with one of the credentialing organizations that he proudly displays after his name.

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.

0
Comments

What do you think?

View comments

Recommended for you

Upcoming Event

Sep 13

Conference

Women Adviser Summit - Denver

The InvestmentNews Women Adviser Summit, a one-day workshop now held in four cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video

Events

3 Questions to ask yourself when making your succession plan

Michael Futterman from Janus Henderson Investors has sage advice for advisers as they approach retirement.

Latest news & opinion

CFA Institute adding crypto, blockchain to curriculum

Subjects will be added to its Level I and II coursework for the first time next year.

Trump tax plan making dividend ETFs hot

Funds that are seeing inflows largely steer clear of sectors like utilities.

Wells Fargo Advisors continues to see a decline in brokers

Company also set aside $114 million over fees for rich clients.

Morningstar to replace funds in its managed portfolios with nine of its own

New sub-advised funds, offered exclusively through financial advisers, are intended to lower costs and provide 'greater flexibility.'

Average client assets top $2 million for first time

Charles Schwab's latest RIA Benchmarking Study reports organic growth is driving increased AUM and revenues.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print