Lurking in the shadows... unethical clients

When we talk about ethics, we often train our spotlight on advisors. We assume unethical conduct usually starts inside them and spreads like the gathering gloom of a winter evening.

But clients can trigger misconduct, as well. In their desire to make money or save money, they can push their advisors into ethically gray, if not black, areas. And because many advisors believe the client is always right, they go along. Wrong!

The fact is, unethical clients can bring you down:

• By pushing to participate in a deal open only to accredited investors.
• By asking you to hide a medical condition from a life insurance company’s underwriters.
• By wanting an estate planning approach that is clearly abusive to family members.
• By asking for a cut of your commission check.
• By using you as a vehicle to commit fraud.
• By hiding information you need to do your job properly (or disclosing intentionally inaccurate information).

Once clients pull you into the shadows, it can be hard to find the light again, especially if you’ve lied, violated company policy or broken the law on your clients’ behalf.

The good news: Integrity can illuminate a path through the darkness. Here are some tips to keep you straight:

Check out prospective clients.

In fact-finding, listen carefully to what they say. Are they playing you? Are they asking you to do unreasonable things? Do they seem to be honest? If you pick up a strange vibe from a prospect, don’t dismiss it. Walk away from the relationship. One of the beauties of our business is that an advisor has the ability to choose his clients just as clients get to choose him. Don’t hesitate to invoke that privilege if your ethics alarm goes off.

Take control of your client relationships.