by Tony Vidler
As the financial advice industry positively plods its way towards full professionalism one of the many issues it wrestles with is interpreting, or perhaps defining, what professionalism means.
Rather than incessantly debating the meaning of the word “professional” itself we should look to other industries and learn from them about how professionalism is determined in the most critical court there is: the court of public opinion.
Whether we like it or not; whether it is fair or not…public opinion and public perception goes to the very heart of determining whether a person (or a group of people) are eligible to call themselves “professional”. The trust of the public, or their support of the use of the word “professional” by an industry, will often be determined by how they perceive “responsibility”.
There have been 2 stories in the media in NZ recently that are superficially very different – yet both raise profound questions regarding the extent of professional responsibility. In both cases the people at the center of the story have been damned in the court of public opinion already it would seem. In both cases there are lessons for the financial advisory industry as it works its way towards full professionalism.
One story is about 2 radio DJ’s who made a prank call, and elicited private and confidential information about a member of the British royal family who was a patient in hospital. In doing so they contributed to a serious invasion of privacy that squarely placed the hospital itself and the duped nurse who discussed the patients situation in invidious positions. The nurse involved was so distraught over what had occurred that she committed suicide shortly thereafter. A prank…a bid for cheap laughs and popularity…resulted in serious and unforeseen consequences.
The other story dominating headlines here has been the conclusion of the Royal Commission of Inquiry into the collapse of the CTV building in the Christchurch earthquake. This building collapse accounted for 115 of the people killed during that earthquake in February 2011. By any measure the building collapse was catastrophic. Conclusions from the inquiry suggest that professionals involved in the structural design and the process for this building carry direct responsibility for the building failure and consequent deaths.
Appallingly, it would appear that one of the “professionals” is actually a complete charlatan. A fraudster who impersonated a qualified professional had actually been in charge of the construction of the building which collapsed upon itself. But we shall leave the fraudster aside – every profession has its infiltrators and imposters.
Both of these stories are tragedies of different magnitude – though each individual death and each individual injury caused by these two events is a significant tragedy to the families as you would imagine. The question that is raised now for others is: what is the extent of professional responsibility?
The calls for action in the two cases above from the public range from career-ending eviction from their profession through to facing manslaughter charges and criminal prosecution. Professional eligibility does not get much more tenuous than that.
The first lesson for all professionals is: in the court of public opinion there is no presumption of innocence.
Harm has been proven; responsibility must be apportioned. The consequences of the professionals decisions or actions simply determine the degree of professional chastisement. The allegation effectively becomes the evidence that the professional MUST be responsible.
Professional responsibility is a tenuous concept in many respects, and there are fierce debates and often deeply entrenched camps and belief sets even within a profession as to where professional responsibility begins and ends. It is no simple thing to define.
A good working definition of “professional responsibility” though is:
“Legal and moral duty of a professional to apply his or her knowledge in ways that benefit his or her client, and the wider society, without causing injury to either”
There is no doubt at all that if injury is caused there is a case to answer regarding whether a professional has been responsible in the execution of their duties. However, considering “injury” conceptually – beyond simply the literal interpretation of the word – raises many questions. Often clients experience injury or hurt because of product failure or simply because they experienced adverse consequences. It is far too simplistic (and often downright unfair or unwarranted) to apportion blame and responsibility upon the adviser for poor market performance, product supplier incompetence, management fraud or a myriad of other potential reasons for disaster that might be considered an “injury” in its widest context.
Separating the professionals responsibility from the range of hurtful things that can occur to a client is a difficult thing to do – and is quite rightly a matter to be left to the experts within the professions, or the courts who specialize in balancing justice and fairness with responsibilities to society and its rules.
All professional advisers would agree with the concept of applying their knowledge for the benefit of the client. All would agree with the objective of not causing injury or harm. Many would also agree with the concept of also applying their expertise for the benefit of the wider society also – or those beyond just their own clientele.
But unintended consequences happen every day. And when they do a professionals career may well be finished that same day.
The only safe course of action for a professional is to hold themselves to a higher standard than that which the public reasonably expects of them.
Then apply the mirror test – look in the mirror and assess whether your actions and advice look good on you. Are you happy for them to be known publicly? Are you willing to bet your career on your actions?
That is what you are actually doing every day – betting your career on your behavior and professional actions – and you will be judged in the court of public opinion where there is no presumption of innocence.
Think about your actions, and the possible consequences. Then judge yourself first.
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