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The ethics of financial literacy… what would you do?

Wednesday 24 June, 2020
by By David Goldfeld, UBank + BFSO Young Ambassador

You work for a subsidiary of a large financial institution and you are meeting a new customer for the first time, who recently inherited a significant amount of money. The customer wants a better understanding of how a relationship with a planner works and what are the expectations of both you and them. 

In this meeting, your customer emphasises their passion for climate action, volunteering and other social impact initiatives and makes it clear they would like all financial decisions to align with their ethical values. You ask your customer what they know about ethical investing and discover their knowledge is limited, and family and friends have told them that investing ethically is a quick way to lose money. The money doesn’t seem to be as important to them as the opportunity they realise they now have to make an impact. 

Although the financial institution you work for does offer some socially responsible products you know there are other institutions out there that will better suit their needs. 

What would you do?

  • What is your duty in this situation? To your organisation? To your customer?
  • Do you take your own values in to consideration?

We encourage you to post your answers in the comments so we can create a healthy discussion, with the aim of learning from our peers, becoming aware of differing perspectives and challenging our own biases. 

If you would like to submit an ethical dilemma to feature in an upcoming weekly challenge please email: - we are happy to post it anonymously. 


There are 3 comments for The ethics of financial literacy… what would you do? .

Re: The ethics of financial literacy… what would you do?

Thursday 25 June, 2020
by George
Your first duty is to your customer. You should educate your client on ESG investing, the pros and cons re: returns etc. and have a trade-off discussion.If the products on your APL do not align with your client's needs, then seek one-off approval for products you have researched that meet your client's criteria. If your organisation will not approve these products, then let your client know that you cannot meet their best interests and invite ot seek an alternative financial planner.

Re: The ethics of financial literacy… what would you do?

Saturday 27 June, 2020
by Sarah
I think there is a way to keep the client. If you are transparent with them, explain that your organisation offers a range of products, not all are impact investment options but some may have better guarantees for higher yield.

Re: The ethics of financial literacy… what would you do?

Friday 3 July, 2020
by Kym
1st and foremost is your duty to the client (prospect client). If you are not able to service their needs, offer to make a referral. This is a requirement of Standards 9 & 10 of the Code of Ethics. Before you get to that though, perhaps you could spend some time helping the person develop their financial literacy by guiding them to resources including in-house resources that explain portfolio construction and the trade off between risk and reward. Make sure you understand what your research team's approach is to SRI investing and that you are able to articulate the investment philosophy of the firm. It is only really after you have done this that you will understand if you are able to provide the prospect with advice. Regardless of your personal values, you must remain steadfastly client focused. Implicit and explicit bias is a real barrier to acting in the client's best interest. If you have fixed views about SRI/ESG investing, for example, you must make sure you self-reflect before you enter into client conversations about the topic and, if you can't put your personal views to the side, you must decline the engagement and/or refer to another adviser. More broadly, if you think that your APL should offer more SRI/ESG products, you may be able to discuss this within the business to promote the inclusion of more SRI/ESG products or, conduct due diligence of suitable referral partners for this type of advice.

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