Rules are not enough!

Ethics form an integral part of the foundation of the financial services industry.

Let’s take a look at defining ethics and how they differ from rules.

In a general sense, ethics can be defined as a set of values that guide individual behavior. Values change over time, but the change is always driven by standards of right and wrong, not by personal need. Frequently agreed-upon ethical values include accountability, fairness, honesty, loyalty, reliability, and trustworthiness.

The concept of ethics can be defined more specifically in three ways:

• It represents the rules or standards governing the behavior of a particular group or profession.
• It is a set of moral principles or values.
• It is the study of the general nature of morals and moral choices made by individuals.

Morals are the rules and habits of conduct that are established according to a society’s perceived standards of right and wrong. Moral principles are based on reason; they are not established or changed by authoritative bodies, although they may underpin some decisions made by those authorities.

Ethical behavior is profoundly different from compliance with the defined rules and regulations of an industry. Rules set out standards that must be followed; however, rules cannot encompass every possible situation that may occur in day-to-day business.

People follow rules because they must, not necessarily because they believe it is the right or moral thing to do. In fact, it is possible to act unethically even when complying strictly with the rules.

Ethical behavior, in contrast, requires internally established moral judgements that can be applied in any situation. It goes beyond prescribed behavior to address situations where rules are either not clear or contradictory. Ethics involves compliance not only with the letter of the law, but also with the spirit of the law. The basic concepts that constitute ethical behavior in the securities industry are founded on ethics theory and ethical principles.

The regulatory environment in which the securities industry operates consists of the rules and requirements of the provincial securities regulators. These rules, coupled with accepted industry practices, set a basic standard for ethical behavior in the industry.

Business Owners

The most overlooked area of financial planning for business owners and incorporated professionals is the lack of integration between corporate and personal assets. When the majority of your assets are in your corporation you need very specific, specialized and personalized financial advice.

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