Ethics in financial planning: Analysis of ombudsman decisions using codes of ethics and fiduciary duty standards

Daniel W Richards, Abdullahi D Ahmed and Kenneth Bruce
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Daniel W Richards: School of Administrative Studies, York University, Toronto, ON, Canada
Kenneth Bruce: School of Accounting, Information Systems and Supply Chain, RMIT University, Melbourne, VIC, Australia

Australian Journal of Management, 2022, vol. 47, issue 3, 401-422

Abstract: Scandals show that ethics is an important topic in financial planning. Our research analyses 212 financial ombudsman decisions (2013–2018) to understand the nature of financial planning misconduct in complaint decisions. We develop a coding structure to ascertain what professional conduct involves and then use content analysis and cluster analysis to identify the aspects of professional conduct occurring in these misconduct decisions. Diligence, acting in the client’s best interest and having no reasonable basis for advice are interconnected elements in over half of these decisions. Secondary elements are misleading statements, conflicts of interest and disclosure. Analysis of decisions involving fiduciary duty showed that financial planners failed to ascertain a client’s circumstances and did not form advice based on their client’s information. As financial planning professionalises, future research, financial planning education, policy and practice should address these issues. JEL Classification: D14, G20, G50

Keywords: Codes of ethics; diligence; fiduciary duty; financial advice; financial planning (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:47:y:2022:i:3:p:401-422

DOI: 10.1177/03128962211022568

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