Paul Kearney
I have the great privilege of calling myself a financial adviser, and it’s a responsibility I take deadly seriously.
Ours is a Profession that is built on trust and integrity. And, like my many peers who live and breathe their fiduciary duty, I believe operating within an ethical framework is not only my moral responsibility but it’s essential to my firm’s (and more importantly, to our Profession’s) long-term viability.
From the GFC and Storm Financial, to the (infuriatingly frequent) fiascos within the banks and big institutions that continue to degrade all of our good work, we’ve seen, time and again, what happens when ethics take a backseat in the world of finance.
As a Profession, financial planning is only in its infancy. And, whilst we’ve got lots to learn, it’s enormously exciting that we are able to help shape what it will look like into the future.
It should go without saying but during these important formative years, we must fiercely protect our Profession. Reputation is hard fought and won – but we can win it. To do so, we have to prove that Advisers are not only doing amazing things for their clients, but as a Profession, we are taking a stand. Leading Advisers and leading practices need to join together and say there is unequivocally no room for cowboys in our Profession.
And then… then we must build robust processes, frameworks and industry guidelines that help us protect our Profession by embedding ethics and the client’s best interests into all aspects of our work.
It’s a continuous journey and we’ll never quite “there” but at Kearney Group, here are a few things we’re doing to get on the front foot.
Rigorous recruitment practices
Building a solid reputation across our Profession begins with how people join our ranks. We need to follow the lead of doctors and lawyers, and make becoming an adviser competitive and sought-after. And when we get to the point of recruitment and hiring decisions, we must be selective and demand rigorous processes sit behind all of our decisions.
- To even apply for a role, we demand high levels of education and training – since 2008 a Bachelor’s degree and CFP® accreditation have been our internal minimum standard for employment as a financial adviser in our practice.
- We carefully and deliberately recruit team members that will act in our clients’ and our practice’s best interests. The first stages of our interview process are entirely cultural and behavioural – we know we can teach technical skills, but we must demand from the outset that our people align with the ethical framework of our business.
- And, before we move to any appointment, we embark on rigorous reference checking, background screening and we obtain police clearances.
TIP:There are many third parties that will do AFP or CrimTrac checks on behalf of employers. Have a think about what you need – Do you need the original AFP Certificate? Do you want to do the administration or get your candidates to manage it themselves? How quickly do you need to get the results back and how many checks will you do per month? All of these things will influence who you might engage.
Policies and procedures
Call me an optimist, but I believe most people want to do the right thing in their work. If people don’t know what your organisation values and expects of them, however, how are they ever to deliver to those standards? Policies, procedures and a practice Code of Conduct are great was to ensure everyone is on the same page. They also provide really crucial mechanisms for dealing with deliberately deceitful or negligent behaviour.
- We maintain a suite of company policies covering topics like privacy, confidentiality, grievance management, professional independence and duty of care to clients.
- We also have internal Professional Standards and a Code of Conduct which clearly outline our expectations for ethical behaviour.
- Our team members are introduced to, and required to acknowledge/sign off on, procedures and policies to ensure ethical behaviour is understood and upheld.
- In addition to our internal standards, our CFP, CPA and CA qualified team members are also beholden to the professional standards laid out by their industry accreditors.
TIP: Writing up a suite of basic policies can be a huge job, but there are many HR and business support services available if you look around. Look for a service provider that can provide you with template policies and then put your time into customising them for your firm. Access to an HR or employment relations hotline is also very handy as you’ll want to ensure any customisation is in line with workplace legislation and the Fair Work Act.
Rethinking reward structures & traditional KPIs
Changes to remuneration, commissions and incentive structures in financial services are certainly on the move – however, there’s a long way to go yet. Here’s what we’re doing at Kearney Group:
- Our advisory teams are salaried employees and we offer market-competitive remuneration to our people. We’ve maintained a strict ‘no-bonus/kickbacks culture’ in our firm over the years and whilst that makes it tough at times to compete with the banks for talent, we believe the ethical bullets we dodge by removing such incentives are profound. How can we put our hand on our hearts and know our advice is independent as long as we’re receiving payment for giving that exact advice? The funny thing about ethics is perception is as important as reality. In our eyes, a perceived conflict of interest is as troubling and damaging to the profession as a true conflict.
- Our challenging KPIs and targets are set at a divisional level, not on individual levels. Whilst we each notionally have an idea of what we need to achieve in order for our team reach its overarching objectives, in the spirit of collaboration and teamwork, our primary focus is on the division’s collective success.
- Likewise, when targets are met, the entire division will be rewarded. We celebrate with team holidays, special events and experiential/non-monetary rewards in an effort to build strong colligate bonds, whilst simultaneously recognising outstanding performance.
TIP: Advertising your “no-bonus” culture when recruiting staff is a good way to get like-minded people in the door. It’s also a way to avoid tough conversations in the future. Talk about the “why” and most people will understand and respect the business decision. Plus – it doesn’t hurt that their fixed (guaranteed) income is a lot higher than in places where commissions and big performance bonuses are paid.
Collaborative relationships in a multi-disciplinary firm
At Kearney Group, collaboration is at the core of everything we do. It just so happens to also be a really great mechanism for protecting process and ensuring high quality advice goes to our clients. Here’s how it works around Kearney Group:
- Our people work in Dedicated Advisory Teams and at least two, many times more, advisers will be in attendance at client meetings. Not only does this present amazing opportunities for learning and professional development for our team, it ensures our clients are truly known and deeply understood by the various professionals who work in their service.
- As a multi-disciplinary practice, our advisers are also required to work collaboratively, across departmental lines in the service of their clients. It’s not unusual to see client meetings held with both an accountant and financial planner in the room.
- The relationships we seek to develop are ones between the client and the practice; rather than between the client and a single adviser.
- Developing this culture of collaboration and embedding deep client understanding within the entire firm, has many benefits:
- Innovation & Improved Outcomes – as the saying goes: “two brains are better than one,” and by drawing on the experience and knowledge of multiple advisers, we frequently come up with dramatically bigger and better ideas. Our clients love that they’re able to draw on expertise of a range of specialists in a single location.
- Improved Accessibility & Sense of Client Service – Because clients are known to a team of advisers, when they call or drop by, they’re able to speak to someone who knows them and understands what’s going on in their financial world. It also means that if their lead adviser is ill or on leave or permanently departs the firm, there’s no gap in their level of service.
- Quality – From a QA and governance perspective, our Dedicated Advisory Team structure also helps to embed the expectation that each of us will receive constructive feedback and rigorous peer review on all work that goes out the door. Feedback and Peer Reviews are both extremely important for personal and professional growth, but also a major tool we use to ensure our advice meets our quality, accountability and ethical standards.
TIP: Build tests for oversights in quality, independence and conflict of interest into a Peer Review Checklist. Distribute your checklist to all members of your team and encourage your people to stress-test any job or piece of advice that they encounter. Make providing feedback or reporting a potential issue an easy and open process, that starts from a place of care for your client. The work from the most junior to most senior employees in your practice should be subject to the same level of scrutiny and review.
So there it is – for what it’s worth. A couple of tips and ideas to embed ethics in our work, in our practices and in our budding profession.
The future is bright… it’s an exciting time to be in financial services and with some focus and effort, we can build toward best practice and shine a light on the good people, leading advisers and top firms that surround us. Then replicate, replicate, replicate and legislate… and eventually the tide will turn and one day, we’ll wake up and our ‘industry’ will have blossomed into a true Profession.
By Paul Kearney, Founder & CEO, Kearney Group Financial Services