Code of Ethics and Professional Responsibility CFP

¶ … Ethical Case Using the Applied Ethical Decision Model

Recognize the Ethical Issue

In the case in question, there is certainly a clear-cut ethical lapse on behalf of young Julia. Her failure to appropriately inform her clients of the potential risks associated with their newly proposed investments was dishonest and selfish. This lack of full disclosure certainly undermines the trust that these clients have put in her hands. Even the formulation of a relationship with the securities salesman is highly unethical. As an objective member of a financial planning firm, Julia must approach her job and her client recommendations with an opened and unbiased mind. Having a business relationship that would potentially award her personal gains for professional consideration unquestionably coincides with Julia's equitable responsibility to her customers.

Evaluate Alternative Actions

Consequences

In this case, the consequences of Julia's unethical behavior can have massive effects on the lives of her clients. Especially knowing that this is a retirement situation and that her clients have specifically stipulated that they want to avoid major risks and hope to enjoy their retirement while "being able to sleep at night," Julia's action have the potential to destroy these plans. While not meeting a client's desired rate of annual growth is certainly a risk that all financial planners take (and one that they should accurately inform their clients of), the risks outlined in this case have a far greater negative potential than simply sluggish rates of growth.

Professional Principles and Standards

This grand misstep taken by Julia was in the form of a lapse in integrity, professionalism, objectivity and fairness to the customer. While the most gaping hole in Julia's action plan was certainly her failure to fully disclose her investment knowledge to her customers, her relationship with Alan certainly plays a role in her unethical framework. The failure to inform her clients of the risks of her recommended investment structure would likely fall into the ethical category of integrity. The exploitation of her clients' trust and her actions according to personal gains clearly define this lapse in integrity. What is more, these actions also fall into the category of fairness, as elucidated in the given Code of Ethics. For with Julia's utter disregard for the welfare of her clients through her failure to fully disclose investment information, she certainly behaved unfairly towards her trusted clients.

Julia's unethical relationship with the securities salesman would most likely fall into the category of professionalism. Being that this relationship was forged on the dishonest grounds of personal gains at the expense of clients, this type of relationship surely does not show dignity and respect for clients and associates in the professional environment. Moreover, this alliance could also fall into the realm of objectivity. The bias that was created for Julia through the construction of this regrettable relationship circumvented her ability to be truly objective with her clients.

Personal and Organizational Value

Without question, Julia's actions in this situation certainly discredited her personal value, both from a moral perspective and for future clients. By acting completely on behalf of her own self-interest, she completely ignored and disrespected numerous fundamentals of morality and ethical principles. Being that ethical conduct is so critical, especially in the world of finance, she has certainly tarnished her personal reputation for the greater future.

From an organizational perspective, Julia's actions have also negatively reflected upon the organization that employs her. After experiences with an individual that behaves dishonorably, customers may begin to believe that this type of behavior is tolerated at a given firm. Thus, unethical behavior on behalf of any employee will ultimately come back to bite the organization and its collective reputation.

Make a Decision and Test It

Personally, I believe that Julia's primary responsibility is to her clients. Therefore, as an executive decision-maker, considering her complete disregard for the welfare of these clients and her exploitation of their trust, I would certainly make a case for the termination of her employment. Also taking into account her highly unethical relationship with the securities salesman and the creation of an exploitive situation whereby she is awarded compensation for dishonesty, the executive decision in this case seems quite clear.