Foundation of Ethics
It isn't often that we think about the idea of ethics except, perhaps, to decry the actions of someone who has acted unethically and been exposed in the media. We are usually too busy pursuing our livelihood or simply living our life to give it much thought. Despite that, there is considerable benefit to the financial services practitioner in identifying and internalizing those ethical principles that should guide his or her actions.
In this course we will examine the foundation of ethics and consider the parties to whom the practitioner owes an ethical duty. In addition, we will look at certain ethical yardsticks against which our actions can be measured. Finally, we will discuss the practitioner's sales methods and sales tools and provide a basis for their audit in ethical terms.
Judaism: Thou shalt regard thy neighbor as thyself.
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Buddhism: Hurt not others with that which pains yourself.
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Islam: No one of you is a believer until he loves for his brother what he loves for himself.
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Hinduism: Good people proceed while considering that what is best for others is best for themselves.
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Christianity: Do unto others as you would have them do unto you.
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Confucianism: What you do not want done to yourself, do not do to others.
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In practical terms, ethics is a system or code of principles that directs our actions towards others. Before trying to apply the precepts of any ethical system to the complex and important job of the financial services practitioner, it seems sensible to look somewhat deeper into this system that we know as ethics and understand the principles on which it is based. Not surprisingly, the foundational ethical standards that apply to the financial services practitioner in his or her interaction with customers or represented companies are the same that serve as the building blocks of the earth's great religions: the Golden Rule. The Golden Rule maintains that each of us should treat others as he or she would wish to be treated.
Modeling our actions towards others -- our customers and companies, in this case -- on what we want for ourselves is not only eminently fair, it is also essential for a civilized society. Consider the alternative to this precept of fairness.
In a society in which you were the only member, there would be little need for ethics. You would be the beneficiary of all of its goods as well as the bearer of all of its burdens; there would be nobody eager to share your goods, nor would you be expected to shoulder anyone else's burdens. It is the fact we don't exist alone-and that goods exist in limited supply while burdens seem unlimited-which makes a system of ethics essential. Limited goods must be distributed and burdens shared, and that means that we will disagree. The important question is how that disagreement should be resolved.
There are two fundamental means of dispute resolution: through the use of force and through the use of reason. Any other way is only a subset of these two.
If I use force to resolve a dispute-by brandishing a weapon or making a threat, for example -- I may be able to carry the day, but at what cost? My use of force has probably destroyed any possibility of an enduring relationship. The next time a similar dispute arises, my adversary may use a larger weapon, and the result may be different.
More significant than a future adverse outcome is that, with the loss of the possibility of relationship, the value of my life is sorely diminished. Since the value of my life is so important to me, force isn't the answer.
However, if I choose to use reason instead of force to resolve disputes and, thereby, promote relationship, what principle is likely to be the most palatable to everyone? The answer, of course, is the Golden Rule: specifically, I will treat you in the way that I want you to treat me, and I want you to treat me as you would treat yourself.
Assuming that you have a healthy self-image and, therefore, treat yourself well, the Golden Rule becomes the most rational method of dispute resolution. Taken to the next step, it is the very core of fairness and the fundamental element of professionalism. It is this fairness that is the basic character of any viable system of ethics.
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