Abstract
The U.S. securities industry is in a long-standing ethical crisis. Since the market crash of 1929, Congress, the Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA) have broadened the scope of the regulation and enforcement of industry misconduct with the intent to secure investor protection and trust. The sad truth is, due to individual actions, market scandals continue and the industry fails to secure stakeholder protection and trust. The purpose of this study was to examine types of ethical dilemmas experienced or witnessed by U.S. investment advisers in order to gain an understanding of the internal and external resources the adviser calls upon to arrive at ethically correct decisions. Understanding the decision-making process is critical to improving ethics education and training and thus creating operational resources such that the investment adviser may meet decision-making challenges. Using the qualitative narrative process, five members of the Financial Planning Association, three financial advisory group members and two financial planners, participated in one-on-one interviews. First, the participants were asked to describe their encounters with industry ethical challenges and to describe the forces they perceived to have influenced the decisions made. The premise was that, if the process by which advisers remained
ethical in difficult situations could be identified, those sources of ethical decision making could be both learned and taught. This research found four primary sources of ethical challenges for financial advisers: client pressure, firm and industry pressure, personal needs and economic volatility. The sources of decision-making strength were: conscience, adequate time for reflection, ability to discuss challenges with friend, family member or colleague, reputation and duty to others. Finally, this study reveals the lack of confidence in mandatory industry ethics training as a mechanism to make the industry more ethical. This dissertation will build a case for improved methods of industry ethics continuing education that incorporates a community participation platform designed to meet current industry ethical challenges.
Keywords: ethics, decision making, securities industry, trust, moral obligation,
fiduciary