Maintaining High Integrity and Ethical Practices as an Investment Adviser
DOI:
https://doi.org/10.47611/jsrhs.v12i3.4556Keywords:
Fiduciary Duty, Investment Advisers, Financial Ethics, Virtue EthicsAbstract
In finance, unethical behavior is a regular occurrence. Across History, and most notably the 2008 financial crisis, the age of risk-taking and profit maximization has been at the forefront of financial firms' and institutions' minds beyond the prioritization of integrity. Through the literature review, I researched this conversation to reveal the leading unethical practices that have arisen in the investment advisory industry. The main ethical problems include but are not limited to compensation, corporate culture, and risk-taking. In the scholarly conversation, articles bypass coming to a standard narrative that helps present a solution to these problems. Establishing my research question, “How can Investment Advisers in the United States most effectively promote ethical behavior beyond having good intentions alone?” Semi-structured interviews with six investment advisers were used to accomplish this best. Then a thematic analysis was used, with the most common themes being acting voluntarily, establishing a moral framework, and fostering knowledge through mentorship and experience. After the conversation of these themes, I present a standard narrative. From establishing the themes such as ethical obligation and knowledge, virtue ethics, an ancient philosophy coined by Aristotle in his book “The Nicomachean Ethics,” which encompasses moral and intellectual virtues, will most effectively bridge the absence of ethics in the industry. It is an advanced moral perspective young advisers usually do not have; therefore, researchers must study the role of virtue ethics in the industry and its implications.
Downloads
References or Bibliography
Ang, J. (1993). On Financial Ethics. Financial Management, 22(3), 32–59. https://doi.org/10.2307/3665927
Baselga-Pascual, L., Trujillo-Ponce, A., Vähämaa, E., & Vähämaa, S. (2018). Ethical Reputation of Financial Institutions: Do Board Characteristics Matter?
Journal of Business Ethics, 148(3), 489–510. http://www.jstor.org/stable/45022455
Bollen, N. P. B., & Pool, V. K. (2012). Suspicious Patterns in Hedge Fund Returns and the Risk of Fraud. The Review of Financial Studies, 25(9), 2673–2702. http://www.jstor.org/stable/23263569
Bruan, V., & Clarke, V. (2006). Using Thematic Analysis in Psychology, Qualitative Research in Psychology, 3:2, 77-101, DOI: 10.1191/1478088706qp063oa
Chappe, R., Nell, E., & Semmler, W. (2012). On the History of the U.S. Financial Culture. Geschichte Und Gesellschaft. Sonderheft, 24, 59–84. http://www.jstor.org/stable/41636617
DIMMOCK, S. G., GERKEN, W. C., & GRAHAM, N. P. (2018). Is Fraud Contagious? Coworker Influence on Misconduct by Financial Advisors. The Journal of Finance, 73(3), 1417–1450 http://www.jstor.org/stable/26654699
Dodds, J. (2002). Choosing a financial adviser - who would you trust with your money?
In Practice (0263841X), 24(2), 103–104. https://doi.org/10.1136/inpract.24.2.103
Ellett, F. S., Jr. (2012). "Practical Rationality and a Recovery of Aristotle’s ‘Phronesis’ for the
Professions." In Phronesis as Professional Knowledge: Practical Wisdom in the Professions. Leiden, The Netherlands: Brill. Retrieved Apr 12, 2023, from
https://brill.com/view/book/edcoll/9789460917318/BP000003.xml
Gibbons, G., & Stone, H. M. (2011). PE Managers as Registered Investment Advisors. The Journal of Private Equity, 15(1), 8–15. http://www.jstor.org/stable/43503695
Hackett, P. M. W., Schwarzenbach, J. B., & Jürgens, U. M. (2016).
Consumer Psychology: A Study Guide to Qualitative Research Methods (1st ed.). Verlag Barbara Budrich. https://doi.org/10.2307/j.ctvddzsrf
Halcomb, E.J., Davidson, P.M., 2006.
Is verbatim transcription of interview data always necessary? Appl. Nurs. Res. : ANR 19, 38–42.
https://doi.org/10.1016/j.apnr.2005.06.001
Heineman, R. (1988). Eudaimonia and Self-Sufficiency in the “Nicomachean Ethics.”
Phronesis, 33(1), 31–53. http://www.jstor.org/stable/4182292
Heydenburg, M. R. (2015). The Ponzi Scheme as a Deception Operation: The Bernie Madoff Case Study. American Intelligence Journal, 32(2), 27–34. http://www.jstor.org/stable/26202133
Hoechle, D., Ruenzi, S., Schaub, N., & Schmid, M. (2018). Financial Advice and Bank Profits. The Review of Financial Studies, 31(11), 4447–4492. https://www.jstor.org/stable/48569297
Hursthouse, R., & Pettigrove, G. (2012). Virtue Ethics. In E. Zalta & U. Nodelman (eds.)
The Stanford Encyclopedia of Philosophy https://plato.stanford.edu/archives/win2022/entries/ethics-virtue
Investment Advisers. (n.d.). Retrieved from https://www.finra.org/investors/learn-to-invest/choosing-investment-professional/investment-advisers
Korn, D. J. (2002). Can You TRUST Your Financial Advisor?
Black Enterprise, 33(4), 123.
Maguire, M., & Delahunt, B. (2017). Doing a Thematic Analysis: A Practical, Step-by-Step Guide for Learning and Teaching Scholars. AISHE-J, pp. 9, 3351.
http://ojs.aishe.org/index.php/aishe-j/article/view/3354
Massingham, P. An Aristotelian interpretation of practical wisdom: the case of retirees.
Palgrave Commun 5, 123 (2019). https://doi.org/10.1057/s41599-019-0331-9
Published by Statista Research Department, & 21, S. (2022, September 21). SEC: Financial advisors' clients by segment 2021. Retrieved from https://www.statista.com/statistics/1251278/number-of-financial-advisors-clients-by-segment-sec/
Aristotle. (1975). Aristotle in 23 volumes. Vol 19 The Nicomachean Ethics.
(Rackham, H.) Harvard University Press. https://www.worldcat.org/title/aristotle-in-23-volumes-vol-19-the-nicomachean-ethics/oclc/499869705 (original work published in 340 B.C.E)
Statista. (2022, September 22). Investment advisors in the U.S. - statistics & facts. https://www.statista.com/topics/8381/investment-advisors-in-the-united-states/
Tsoukas, H., & Cummings, S. (1997). Marginalization and Recovery:
The Emergence of Aristotelian Themes in Organization Studies. Organization Studies, 18(4), 655–683. https://doi.org/10.1177/017084069701800405
Published
How to Cite
Issue
Section
Copyright (c) 2023 Andrew Mathiason; Dr. Soo Park
![Creative Commons License](http://i.creativecommons.org/l/by-nc-sa/4.0/88x31.png)
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Copyright holder(s) granted JSR a perpetual, non-exclusive license to distriute & display this article.