Financial advisers should actively promote an ethical culture within their business rather than waiting for regulators to do it for them, according to professional services and wealth management firm Koda Capital.
As the company became the first to have 100 per cent of its employees sign the Banking and Finance Oath (BFO), Koda chief executive and partner Paul Heath told financialobserver he believed a public commitment to ethical behaviour would put the business ahead of competitors.
“In our view you can’t regulate for culture – it’s got to be owned by individuals and companies that say we’re going to behave in a particular way,” Heath said.
“I think that’s what clients are looking for, so for us the idea of having a public expression of what it meant to work with integrity and ethics, we thought that was a really important expression to our clients and our work colleagues of what we stood for.”
He said he believed the BFO was a key part of what should be an ongoing piece of work for advisers – rebuilding consumer trust in their industry following the failings of the global financial crisis (GFC).
“I think the reputation of the industry is hinged on whether our clients trust us to act in their best interests,” he said.
“I don’t think that task should ever stop – continuing to act in a way that builds trust is fundamental to advisers enjoying the confidence of their clients.
“In a post-GFC world it should be a priority for advisers and I think the industry still has a long way to go to get back to a position of trust.”
He said in light of recent scandals that had plagued the major banks’ financial planning arms, clients were looking for independent advice that put their own interests before that of the adviser’s institution – a key reason why he had set up the independently-owned Koda Capital.
“Clients are aware of things like conflicts of interest that exist within the industry and many clients are looking for something different and a sense that they’re being put first,” he said.
“In many ways that’s the essence of what Koda is – being in an organisation that’s independent and takes those conflicts away.”
The BFO, a group formed to encourage ethical behaviour in the banking and finance industry, has gained considerable traction in the industry of late, with the announcement of several new appointees to its board earlier in November.
The new board members include former Australian Prudential Regulation Authority chairman John Laker, AMP advice and banking group executive Rob Caprioli, BT Investment Management CEO Emilio Gonzalez and ANZ CEO of global wealth Joyce Phillips.
Read more at financialobserver.com.au