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

+ Zoom

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

Sponsored financial news

Upcoming Event

Apr 30

Conference

Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video

Events

Building a practice for tomorrow's tomorrow

Advisers: it is time to take a long view of your practice. Check out some tips and strategies on how to do it (and why) with Tom Stefaniak of Pinnacle Wealth Management.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

E*Trade acquiring custodian Trust Company of America

Discount broker buying second-tier custodian for $275 million.

Another thousand Dow points higher, and investors yawn

Market milestones keep falling like dominoes, with 51 records broken so far this year.

LPL retains $570 million with super-OSJ deal

Kansas-based nVision Wealth will come under supervision of Chicago-based IHT Wealth Management.

How does your advisory firm stack up?

Comparing a firm's pay to the competition can point out vast flaws.

10 signs your client is cheating on you

Sure signs that clients may be on the way out the door.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print