According to Dr Hunt, professionals face an interesting conundrum as they navigate their dual responsibilities of serving the community and ensuring the success of their businesses.
“The double-edged sword of professionalism means we often hold ourselves to such high ethical standards that we put ourselves out of business,” Dr Hunt wrote in a recent blog post published on ifa.
Dr Hunt highlighted a critical paradox in financial advising – while charging minimal fees may offer short-term viability, the potential long-term consequence is leaving clients unsupported if the business falters.
Expanding on these ethical obligations, which are encapsulated in the Best Interest Duty and Standard 2 of the Code of Ethics, Dr Hunt said financial advisers need to tread a fine line.
As Dr Hunt emphasised, “Financial advisers are ethically obligated to charge fees which provide their clients with long-term relationships. And to run efficient practices. To stay in business for the long term.”
“Is it in our clients’ best interest to charge no or low fees? Sure, in the short term. We can probably stay in business for a couple of months doing that. But in the long term? That client will be orphaned if we go out of business.”
Discussing the broader landscape of ethical pricing, Dr Hunt asserted, “Everything we do, including pricing, needs to be in our clients’ best interest.”
Turning to the Value of Diligence, Dr Hunt passionately pointed out that the Value of Diligence necessitates cleaning up business processes, streamlining advice processes, conducting a comprehensive pricing analysis, diversifying service offerings, mastering value-based pricing, and regularly reviewing pricing structures.
“Now can you see why the Value of Diligence is my favourite value? It’s inspiring – it wants us to be not only epic professionals but efficient business leaders!
“This is all tempered with Standard 7 of the Code of Ethics which requires fees are fair, reasonable, and value for money, which is part of the broader discussion on the Ethical Pricing of Advice.”
Ultimately, in the intricate dance between professionalism and business sustainability, Dr Hunt’s insights shed light on the delicate balance financial advisers must strike to uphold ethical standards while ensuring the longevity of their practices.
