The 4 Step Ethical Test for Financial Professionals
Best Practice Advice & Compliance

The 4 Step Ethical Test for Financial Professionals

October 7, 2022

by Tony Vidler  CFP logo   CLU logo  ChFC logo

tony vidler ethics for financial adviceI attended a Rotary function as a guest and ‘discovered’ the best ethical test I’ve ever heard.  When I say ‘discovered’, I personally didn’t discover anything at all…but I was introduced to The Rotary Philosophy which was a discovery for me. It is hardly new, having been written in 1932, however amidst the recent discussion in the industry on how to apply ethical standards practically and consistently I was reminded of it and thought it worth repeating.


Their 4 step ethical test is:

    1. Is it the TRUTH?

    2. Is it FAIR to all concerned?

    3. Does it promote GOOD WILL and BETTER FRIENDSHIP?

    4. Will it be BENEFICIAL to all concerned?


As financial services trundles towards becoming a profession we sometimes struggle to adapt academic or legal concepts into workable daily principles.  Applying the fiduciary responsibility of a professional into a simple and easy to remember set of guidelines that can be consistently applied regardless of your specialty area or business structure can be problematic. 

How can one be sure that what you think is right stands up to ethical scrutiny?


I think Rotary have nailed it.  Perhaps in the strictest professional sense Number 3 is not necessarily a fit….but then, why not?  Certainly the fiduciary concept is captured with the simple questions of truth, fairness and benefit to all concerned.  As an ethical test they would apply to any profession.  The third may not apply to all professions, however perhaps it is actually an excellent one for financial services.


Given the level of consumer distrust with financial services it would seem to be an excellent inclusion into our ethical standards.  Does what we do also create and promote goodwill?  Given the intergenerational family impact together with the community benefits of economic self sufficiency that come from good financial planning advice this “test” is perhaps the essential missing element required to achieve consumer acceptance of financial advice as a profession.


Whether that step is or is not required though, this is an excellent 4 step test that any professional can apply to determine whether their advice, service standards and behavior meet the ethical standards that could be expected of a professional.

The 4 Way Test

DISCLOSURE:  I am not, and have never been, a member of Rotary International and am not promoting or endorsing membership of this or any other similar organisation.  I can, and do, admire their stated aspirations and purpose however.


You might also be interested in this related article:
The Art Of Giving Suitable Advice
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