How to set an ethical precedent

Last month we discussed the challenge of working for (or with) bad bosses. We defined them as anyone who tries to lead you to success, including your IMOs, your carrier reps, and even your professional mentors. We also proposed that bad bosses come in two varieties: black hats and gray hats.

The problem with black-hat bosses is they have no qualms asking you to lie or break the law for them as long as it advances their interests. And when this happens, you must figure out how to do what’s right without necessarily quitting. Our solution: think through such dilemmas with a SMART decision-making model.

But what about gray hat bosses, i.e., people who may not ask you to break the law or do anything grossly unethical, but who urge you to bend the rules? Yes, gray hatters can be challenging. They’re everywhere, and their arguments can be enticing. And once you give in, you might find yourself on a slippery slope leading to unsuitable sales and improper replacements

Flavor of the month

Consider the case of Stuart, an advisor selling annuities, life insurance and investments. Stuart started out as a captive agent, but opened his own shop five years ago, affiliating with a regional FMO. Although Stuart had broad expertise, his FMO rep, Aaron, always pushed him toward the “flavor of the month” — a deal generating sweeteners for the FMO and advisor, regardless of whether the client was optimally served.

Athough the FMO never asked the advisor to break the law or hype worthless products, he did pressure him to shoehorn clients into products that weren’t necessarily the best fit. In fact, he suggested that Stuart do less “fact-finding” (understanding the client’s entire financial situation) and more “close-finding” (looking for hot buttons to push in order to sell more “featured” products). Stuart didn’t mind making more money, but he was concerned giving in might lead to ethical or legal problems later.

How would you advise Stuart? Should he deliver what the FMO wants and be happy with his larger commission checks? Or should he stand his ground in order to serve the client’s absolute best interests (and hopefully make a more suitable sale)?

As in our prior column, we believe the answer depends on the advisor’s values and temperament. Since he’s dealing with a gray-hat boss now, making a SMART ethical decision is even more crucial. To that end, he should: