Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Life Insurance

An advisor’s code of ethics

Your article was successfully shared with the contacts you provided.

When many people think of MDRT, they think of production. For instance, the baseline for membership is $90,000 of eligible commissions, $180,000 of eligible premium or $154,000 in income. Those are lofty numbers, and according to the 2012 membership statistics, the organization counts 34,579 qualifying members.

While the numbers are a qualifier, so is the organization’s code of ethics:

  • Always place the best interests of clients above my own direct or indirect interests.
  • Maintain the highest standards of professional competence and give the best possible advice to clients by seeking to maintain and improve professional knowledge, skills and competence.
  • Hold in strictest confidence, and consider as privileged, all business and personal information pertaining to clients’ affairs.
  • Make full and adequate disclosure of all facts necessary to enable clients to make informed decisions.
  • Maintain personal conduct that will reflect favorably on the financial services profession and MDRT.
  • Determine that any replacement of an insurance or financial product must be beneficial for the client.
  • Abide by and conform to all provisions of the laws and regulations in the jurisdictions in which we do business.

I spoke with two longtime MDRT members to get further thoughts on ethics and transparency. David E. Appel, CLU, ChFC, AEP, is managing partner of Appel Insurance Advisors. Appel says it’s vitally important for advisors to be upfront with their clients.

See also: A uniform fiduciary standard won’t change anything

“Do not leave out facts when talking with a client,” he says. Too often, advisors cutting corners will send page 10 of a product document, but conveniently leave out pages that include the downside of a product. As Appel says, the clients need to see the negative aspects as well.

GuyBakerGuy Baker of Irvine, Calif., is a 41-year member of MDRT, including serving as the organization’s president in 2010. Baker makes an interesting distinction on the matter of transparency. “If I come to a client with an agenda, I’m really hiding from them the sole purpose of my interaction,” he says. “If I’m transparent, I come to the meeting with no agenda, and I’m there to listen to their ideas and their situation. To be transparent, I have to maintain ‘no agenda’ for the meeting, even if it means I don’t benefit from it.”