Many execs say “flexible” ethics required to get ahead

Although financial services executives overwhelmingly recognize the importance of ethical behaviour in the industry, there is still a significant gap between that belief and the industry’s practices, according to a study by the Economist Intelligence Unit and sponsored by CFA Institute.

Read: Ethical rot in financial services industry, says survey

The study, A Crisis of Culture: Valuing Ethics and Knowledge in Financial Services, shows that strengthening culture based around driving integrity and financial knowledge across firms is a priority for the financial services industry.

Despite the importance placed on creating a stronger ethical culture since the financial crisis, a serious disparity still exists when it comes to executives’ recognition that adhering to those higher standards will help earn trust, foster career progress and support financial performance.

Although 91% of survey respondents placed equal importance on ethical behaviour and financial success, more than half (53%) think career progression at their firm would be difficult without being “flexible” on ethical standards, and just 37% believe that their firm’s financials would improve if the ethical conduct of employees improved.

Read: RBC exec says industry culture must change

The study also looked at the critical issue of knowledge in the industry. Whilst 97% of respondents said that they are well qualified for their own role, 62% admit that their colleagues know very little about what goes on in departments beyond their own. This shows that a silo culture is pervasive in the industry, with departments acting unilaterally rather than viewing themselves as part of the wider business, suggesting integrated functional and management approaches to risk-proof organisations remains weak.

Statistical Highlights:

Ethics

• 91% of financial executives support the notion that aspiring to a globally recognised set of ethical standards would make the financial services industry more resilient
• 67% of firms have raised awareness of the importance of ethical conduct by all employees
• 53% of financial services executives say strictly adhering to ethical standards inhibits career progression at their firm

Financial Knowledge

• 62% of financial executives don’t know what is going on outside their department
• 60% of financial executives highlight gaps in employees’ knowledge as a significant risk for their firm
• 59% of financial executives agree improving knowledge of the industry as a whole would help make their firm more resilient
• 12% say they are confident in their knowledge of the global regulatory environment

Read: CFA releases global sentiment survey

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.