The best insurance agents and financial advisors always act in good faith and look out for the best interests of the client.

Being an insurance agent means you may face ethical decisions every day. Part of being an ethical and compliant agent lies in making sound decisions that prevent the onset of potentially compromising situations.

But what happens when it is the client that – wittingly or unwittingly – puts the agent into a compromising situation?

Agents constantly have to juggle obligations to clients, their agency and carriers. Who do you serve first? While the default thought might be to always do what’s best for the client, these situations often are not so cut-and-dried, says Brent M. Kelly, an agent with Clemons Insurance in Bloomington, Ill.

“Sometimes prospects or clients will have expectations that are not realistic,” Kelly says. “Or maybe they have done something to put themselves in a difficult situation and they call upon you, the agent, to go beyond what you really ethically should be doing or are even capable of to fix their problem. And that’s where I think sometimes you can get in trouble.”

He notes that agents inherently do want to put the client first. They pay the bills, after all. But he’s seen situations where an agent will go out of the realm of what they should be doing in an effort to help the client.

“They will go above and beyond and do something for their client that really is not only unethical but is just a financially bad decision, and it will cause an issue with the insurance carrier. So you can try to fix this one situation with a client because you want to do whatever you can, but you end up causing a serious strain with an insurance relationship with a company partner that can affect all of your clients.

“So you really need to think about that – part of it is thinking big picture – making this decision to try to fix this which I know really isn’t the right thing to do, but I could probably get away with it. Is it worth risking the rest of your book? That’s a question you’ve got to answer,” Kelly says.

“If you go, ‘Well, I’m not quite sure if it’s the right thing to do, but this is my client who’s in a pinch, I feel bad for the guy. I’m going to go ahead and make an exception because he deserves it.’ And then next thing you know, it backfires, and you got people pointing fingers – ‘You did what?’ That’s a situation where you look at the short term when you really need to look hard at the long term.” Kelly says.

It comes down, as usual, to doing the right thing in the grand scheme of things, says Jason Kestler, president and CEO of Kestler Financial Group, Inc., in Leesburg, Va.

“When a client puts an advisor into a difficult ethical position, its the advisor’s duty to do the right thing, even if they potentially lose the client,” Kestler says. “The advisor needs to explain to his/her client that the reason they hopefully chose to work with him/her, is due to his/her reputation. Reputation is not only important in local communities but is also important with the carriers an advisor chooses to work with. A client asking an advisor to compromise his/her ethics needs to understand they are asking the advisor to risk his/her future prosperity.”

Consistently making decisions to “do the right thing” is the mark of the ethical and compliant advisor, and can help that advisor gain a real edge on the competition by actively promoting themselves as a “safe and ethical” choice in their community.

“It’s kind of a weird dichotomy,” Kelly says, “because gaining a competitive edge by doing the right thing seems kind of silly. But unfortunately in the financial services industry, it does.”

Kelly subscribes to the concept that an insurance agent needs to be “known, liked and trusted” before a prospect will buy from them.

“I think that last one being trust, as an insurance producer or financial advisor in the industry, that’s ultimately what you’re going to be judged upon. People are going to first have to know and like you, and then you have the conversation, but to actually write the check or continue the relationship, there’s got to be that level of trust,” Kelly says.

Kestler points out it isn’t easy to become known for solid ethics. “Relative to someone with good ethics, word of someone who is known for having bad ethics travels at light speed,” Kestler says.

But that doesn’t mean it can’t be done.

“As a child I was always curious to why McDonald’s posted the number of hamburgers served on their signs. It wasn’t until later in life when I finally figured it out. It was a subliminal message. They are basically saying 1 billion people choose to eat here and they didn’t die,” Kestler says. “I’m not suggesting a financial advisor should post how many clients they have on their signs, but I am suggesting they should position themselves as the ‘safe and ethical’ choice in their surrounding community.”

Kelly adds that in his experience, there are a lot of agents that don’t always do things the right way and act in the best interest of the client. He says that by doing right by the client versus doing the selfish thing (ie: pushing a higher-commission product) or the quickest way to put money in the bank, an advisor – with the help of word of mouth, referrals, and even social media – “can become known as, ‘Hey, this is a guy you can trust if you go to him. Here’s what he did for me.’”

An advisor who displays honor, integrity and does the right thing puts himself in a prime position to generate this type reputation in his community.