Principle 1 – Client First
Placing the client’s interests first is a hallmark of professionalism and is a core value of any profession. It requires employees to act honestly at all times and not place personal interest or advantage, in any form, before their clients’ interests.
Employees are faced with many pressures: their client’ needs, employers’ expectations, employee’s own needs, and expectations and the like. The client’s interests must, however, be served above all these competing demands. Employees has an obligation to maintain an ethical practice, regardless of their manner of compensation. Clients have to be served and advised based on what is in their best interest over and above of what is in the interest of the employee and/or another party.
Principle 2 – Integrity
Integrity requires adherence to practices of honesty, fairness, consistency, and candor in all professional matters. Employees are placed in a position of trust by a client and the ultimate source of that trust is the employee’s personal integrity. Allowances can be made for legitimate differences of opinion, but integrity cannot co-exist with deceit, dishonesty or unfairness.
Adherence to the Principle of Integrity requires the employee to fairly and consistently do the right thing in the best interest of their clients even when no one is watching or will find out. Further examples of integrity are: keeping to one’s promises, standing up for what is ethically acceptable even when it is not self-serving to do so, acting on principles that go beyond mere legal compliance, making recommendations as if every decision and action would be open to public scrutiny, and continuously enhancing the credibility of and trust of the services of the employer and the employee. The employee delivers on the service promise made to the client and every client should get the best efforts of the employee, within the limits of their engagement. To test their integrity, employees ask themselves: Am I prepared to read about my actions and decisions in a newspaper?
Principle 3 – Objectivity
Objectivity requires intellectual honesty and impartiality. Regardless of the services delivered or the capacity in which an employee functions, objectivity requires employees to identify and manage conflicts of interest and exercise sound professional judgment.
Being objective means demonstrating the ability to evaluate information and circumstances without letting one’s own emotions or competing priorities (such as compensation) cloud judgment. For employees who are financial planners (FAIS Act: representatives) objectivity also encompasses rendering advice or making recommendations based on thorough research and subsequent
knowledge and understanding of the client’s needs, sound analysis of products and optimally matching clients’ needs with the products best suited to them. Regardless of the service rendered or the capacity in which employee function, personal bias, undue influence, and personal interest never play a role in the way employees render their professional services.
Principle 4 – Fairness
Fairness requires providing clients with what they are due, owed, or could legitimately expect from a professional relationship. Employees are fair and consider the needs and expectations of all stakeholders to their transactions in a balanced and unbiased manner. Information required by clients is provided in an unbiased and way and in an easy to understand format. Employees identify and disclose real and potential material conflicts of interest in a timely manner. Fairness implies treating others in the same manner that you would want to be treated.
Guidance note: Fairness requires an application of the ‘reasonable man’- test. As such, fairness does not necessarily mean that everyone receives the same treatment, but rather that clients consistently receive at least what employees, acting reasonably and responsibly, would determine that the clients need and what the employee has committed to provide. There may be situations where it is necessary for employees to withdraw their services and refer the client elsewhere as a result of a conflict of interest. Fairness requires impartiality and the disclosure of all facts by employees that are relevant to their clients’ situation. Employees suppress their personal feelings, prejudices and needs in all professional dealings. Employees communicate at a level that is understandable to each of their clients. This applies to all communications (verbal or written). Fairness implies that employees who are financial planners (FAIS Act: representatives) are able to consistently justify their decisions. Even in hindsight, they should be able to declare that they would have provided the same advice at the time if they had the opportunity to again consider those decisions and advice. In this way, fairness is linked to reliability.
Principle 5 – Competence
Competence requires attaining and maintaining a high level of knowledge, skills, and abilities in the provision of professional services. Competence also includes the wisdom to recognise one’s own limitations, consulting with other professionals when in doubt and referring clients to other professionals should one not have the time, ability or inclination to optimally respond to a client’s needs. Competence requires the ULTIMA employee to make a commitment to continued learning and professional development.
The employee who is a member of the FPI meets FPI certification requirements. Financial Planners (FAIS Act: representatives) maintain their knowledge and skill by keeping up with changes in economic and regulatory environments and any changes in the financial services industry and areas of specific technical knowledge. Training takes the form of relevant industry conferences, seminars, courses, research, writing, reading, teaching/presentation, pro bono work or mentoring others. Employees communicate their competence and limits to their competence when initially engaging with clients. Thereafter competence is demonstrated in every client interaction. If at any time, employees doubt their ability to adequately fulfill their obligations to a client, they need to withdraw from that engagement either temporarily or permanently. Employees execute proper due diligence inquiries and fully consider the available information when providing recommendations. Should the situation merit an alternative approach, employees need to fully rationalize and substantiate their advice in defying prevailing norms. Employees are not expected to be experts in all fields that may affect a client’s financial portfolio, and should therefore not represent themselves in this way. In guiding the client to solutions that meet the client’s objectives, employees are expected to apply evidence-based knowledge obtained through proper analysis or consulting with other experts.
Employees who are not registered as Representatives with the FSCA (previously FSB) may not provide financial advice to anyone. Administrative employees may only provide information on financial products and on processes to clients. The information should be accurate.
Principle 6 – Confidentiality
Confidentiality requires client information to be protected and maintained in such a manner that allows access only to those who are authorised. A relationship of trust and confidence with the client can only be built on the understanding that the client’s information will not be disclosed inappropriately.
It is the employee’s duty to ensure the confidentiality of all client information. An employee does not divulge or share any details about a client to any person in any setting without the client’s consent. This includes, but is not limited to, the client’s name or identity, any information about a client’s financial or personal affairs, or to even mention a specific client by name to a third party without the client’s consent. The confidentiality obligation can only be nullified by a court order or legislation. The employee takes all reasonable steps to protect and securely store all client documents and communications, in whatever form they may exist, from unauthorised access. This includes maintaining privacy and confidentiality during the destruction or return of all records when these are no longer needed. Furthermore, employees heed recently introduced legislative provisions regarding the protection of personal information.
Principle 7 – Diligence
Diligence requires fulfilling agreed upon professional commitments in a timely and thorough manner and taking due care in planning, supervising and delivering professional services.
Diligence is the degree of attentiveness, care, and skill expected from employees in their professional service rendering. Diligence ensures the delivery of optimal value for the client. It requires a high degree of care and attention to detail in all client dealings. An employee’s responsibility to be diligent applies to the entire process of engagement with the client and includes, but is not limited to, thorough collection and analysis of client information, prudent evaluation of options; and meaningful and clear presentation of recommendations. Work that is done carelessly, or delegated to a subordinate who does not have adequate qualifications or expertise, may lead to inaccurate analyses or compromised advice that may not be in the client’s best interest. Preservation of the employee and the financial planning profession’s reputation is paramount. Applying diligence also protects employees from civil claims, regulatory action or disciplinary action in the event where a client suffered damage as a result of the employee’s negligence. The employee is reliable and
responsive to the client’s needs. Given that financial markets and the client’s personal situation may change at short notice, it is important that analyses be completed and recommendations implemented in a timely manner. When employees have an on-going mandate, they proactively, and at least annually, address the changing needs of all their clients within the context of the changing external context. Diligence also refers to the opportunity for employees to educate clients about the value of financial planning and the importance of engaging in sound financial practices and behaviours to meet their unique financial goals. Although it is ultimately the client’s decision to follow the advice offered, the employee endeavours to motivate their clients to take actions that will ultimately benefit them.
Principle 8 – Professionalism
Professionalism requires behaving with dignity and showing respect and courtesy to clients, fellow professionals, and others in business-related activities, and complying with appropriate legislation, regulations, rules, and professional requirements. Professionalism requires the employee, individually and in co-operation with peers, to enhance and maintain the financial planning profession’s reputation and public image and its ability to serve the public interest.
Professionalism refers to conduct that inspires confidence, trust, and respect from clients and the broader community. Professionalism is an outcome of following the other seven Principles of Conduct above. Beyond the expertise required to practice in a particular field, professionalism is marked by high standards of ethics, behavior and service, and the manner in which services are delivered, that set an individual apart as a professional. Employees take pride in their work and strive to always do the right thing, regardless of the type of business or services, their particular job function or level, their corporate title or designation, or their mode of compensation. Inherent to professionalism is a sincere desire to assist clients to achieve their goals and to focus on “the greater good”. True professionals continually focus on providing high-quality advice and service. Employees are always committed to acting in the interests of others and are unselfish in their motives. They inform clients tactfully on what they need to hear. Employees represent their employers and the profession of financial planning with the utmost dignity and respect, thereby promoting their field in the eyes of the public, regulators and the relevant authorities.