More On Legal & Compliancefrom The Advisor's Professional Library
As financial advisors, we sometimes find ourselves in conflict. For example, when buying investments on behalf of a client, we may find ourselves conflicted between serving the client’s best interest on the one hand, and obtaining the largest commission on the other.
The financial advisor profession is not the only one with common and inherent conflicts of interest; the legal profession has a serious case too.
The client’s interest is to settle a case as quickly, inexpensively and quietly as possible, whereas the lawyer’s interest is to drag it into court for a protracted battle.
Even the medical profession is not immune, although perhaps a little further removed. In HMOs, it is the medical staff who (hopefully) wish to do right by the patient, and yet the business administration staff (who pay doctors their salaries) are perhaps more concerned with cost savings, at times against better medical judgment.
I have given much thought lately as to how such noble professions could be set up in a way with these innate conflicts of interest constantly lurking below the surface. My conclusion is that they were not set up this way and the conflicts of interest that we see today are the effects of a relatively recent shift in our drive, purpose, values and outlook as professionals.
Let me illustrate my point with a true and poignant anecdote. In the early 1930s my father, after graduating high school, was travelling from South Africa to England to study. A very good boyhood friend of his was travelling with him on the same ship. This friend, however, was not yet sure as to what he wanted to study and what career he wished to pursue. He was oscillating between two possibilities — either a rabbi or a doctor. When I first heard about his quandary, it seemed quite absurd to me. Those two vocations appeared to be so diametrically opposed and in my mind, could be compared to somebody questioning whether to become an astronaut or a farmer!
When I thought about it more carefully, it made perfect sense. In those days, you see, a person became a doctor because he was driven to help others. His mission and purpose was to heal people. Making a living was secondary to this sense of higher purpose. A doctor’s mission was not that far from a rabbi’s — both were to help others, one physically and the other spiritually.
The same was true for the legal profession. There was a higher purpose driving the profession. People who became lawyers were interested in helping others to solve their problems, to advise and to provide wise counsel. Of course, they needed to make a living doing so, but that did not eclipse their higher purpose. Nowadays, many lawyers are happy to assume the role of gun slinging mercenaries in the courtroom battlegrounds, if that will earn them more money.
In this ideal world where doctors practice medicine to help and to heal, and lawyers practice law to advise and to counsel, there is no inherent conflict of interest at all. It is balanced by a strong and powerful sense of purpose and mission.
The conflict of interest emerges when we are practicing our professions devoid of this higher purpose, mission and value. In fact, the degree to which one experiences a conflict of interest is perhaps the litmus test as to how much our true, real and authentic desire to help others is driving our professions. On a deeper level, it is in fact when our practices are driven by a genuine drive to help others that we are entitled to earn a good living by doing so. When our practice is driven by self-serving interests alone, we are no longer earning a living, but rather profiteering.
Practicing our professions with a higher purpose and noble mission is not only good because it is ethical and helps avoid these conflicts of interests, but it is excellent for business too! We have all had the misfortune to be assaulted by a self-serving salesperson, imposed upon by an opportunistic lawyer or rushed by a doctor trying to see as many patients as possible before noon. We have also all had the good fortune to be advised by honest, knowledgeable and helpful salespeople, counseled by understanding lawyers of integrity and professionalism, and treated by doctors with patience, empathy and caring.
To us as consumers, the difference is palpable, obvious and transparent. We are all repelled by the former and attracted to the latter. It is indeed difficult to comprehend why anyone trying to build a practice on the foundation of good loyal clients, patients and customers would not establish their work on a higher purpose, focus and desire to help others.
It is interesting to note that the mission statements of some of the most successful companies in the world all include the notion of helping others. For example Merck: To gain victory against disease and help mankind; Disney: To use our imagination to bring happiness to millions; Johnson & Johnson: To alleviate pain and suffering.
As financial advisors, we can also choose to allow our practice to be driven by a higher sense of purpose and to see ourselves engaged in a meaningful help-profession. We must formulate our own personal mission statements to include a drive and purpose to help others as paramount. It should be that purpose which guides our interaction with clients from the initial consultation, and which steers our advice, strategies and solutions throughout the client relationship.
When we do this, we will feel a very deep connection and alignment to what we do. We will cultivate a very solid and loyal client base. We will build successful practices. We will restore nobility and dignity to our profession.