Views on improving the integrity of global capital markets
22 January 2013

Ethics Wake-up Call: Change Behavior before It’s Too Late


As the clock started ticking towards midnight on New Year’s Eve, my hands moved gingerly towards the unsuspecting palm next to mine.  “Ten, nine, eight, seven, six, five, four, three …,” the crowd counted down.

Samuel is my son. He was born prematurely. As he has grown, Samuel has exhibited a higher energy level than that of his sisters. We always thought it’s a “boy” thing.

In 2006, while working in London, I received a rather distressing call from my wife in Singapore. She said, “The school has asked Samuel to leave.” He was 5 years old then.

When I heard that, my heart sank. We suspected there was more to it than just being naughty. We eventually found out that he has Attention Deficit Hyperactivity Disorder (ADHD). As this was uncommon in Singapore, my wife and I spent a few years trying to find a cure. 

Being Chinese, we looked at Chinese medicine first. Samuel has undergone acupuncture with needles in his head, massages, and consuming bitter liquid drinks. When none of those worked, we tried alternative medicine:  bioresonance, neurotherapy, and eye-related drills. Nothing worked.

We were stumped! After attending numerous counseling sessions and hearing from other parents in a support group, we decided to try addressing his behavior directly. This was primarily through sports. It made a difference, and Samuel now holds a black belt in Taekwondo and bowls for the school team.

What does this story have to do with ethics? Nothing! Why am I referencing it in the context of ethical behavior? Because it illustrates that, in order to improve, one must change. However, change alone is not sufficient. Knowing what and how to change is crucial. And sometimes that, in and of itself, is not easy to accomplish.

Max Bazerman and Ann Tenbrunsel wrote in their 2011 book, Blind Spots: Why We Fail to Do What’s Right and What to Do about It, that we sometimes act unethically without even being aware of it. Why is that so? They call it “bounded ethicality.” This is explained simply as making decisions that are harmful to others and inconsistent with the beliefs and preferences of the decision makers’ conscious.

The environment is one reason why this happens. For example, in Singapore it is against the law to cross the road when the “red man” lights up. But some who would otherwise wait for the “green man” to light up may succumb to “breaking the law” if they are late or see no reason to stand before an empty road. Over time, this behavior is ingrained into those individuals, who reason to themselves that it is okay to break the law. It is when we desensitize ourselves that we get into this problem of thinking that we are right when we are actually not.

We have all done things in our past that we may not be proud of. In fact, for some in the finance profession, poor ethical behavior may have helped them achieve their sales objectives, earn an increase in their bonus, or even obtain a promotion. However, these poor behaviors will eventually catch up with the participant.

As in the case of my son Samuel’s school expulsion, one day you might be told you’re not needed anymore. In some cases, this will be too late — no second chances.

In the 2013 CFA Institute Global Market Sentiment Survey, 56% of survey respondents said that poor ethics is the main cause of mistrust in the financial industry. Of these, mis-selling by financial advisers tops the list. If you think you’re in that category, be introspective. Ask yourself, “Am I doing the wrong things?” If yes, make a commitment this year to set forth on a path of doing the right things.

A good place to start: CFA Institute codes and standards. As outlined in Standard III A of the CFA Institute Code of Ethics and Standards of Professional Conduct, we have a duty of loyalty, prudence, and care to our clients. This means that we must act with reasonable care and exercise prudent judgment. Really, it starts by putting your clients first with their best interests at heart.

“… two, one, Happy New Year,” the crowd chanted. As I turned to embrace Samuel, he looked at me, smiled, and returned the hug. This was Samuel’s first visit to church during which he sat for the whole service without running around the place.

About the Author(s)
Tony Tan, DBA, CFA

Tony Tan, DBA, CFA, is co-head of the CFA Institute Ethics, Standards, and Professional Conduct division. He is particularly responsible for ethics education offerings and the professional standards of CFA Institute. He is also a member of CFA Society Singapore.

3 thoughts on “Ethics Wake-up Call: Change Behavior before It’s Too Late”

  1. Tianyuan Zhao says:

    Poor ethical behavior may have helped them achieve their sales objectives, earn an increase in their bonus, or even obtain a promotion. However, these poor behaviors will eventually catch up with the participant.

  2. Melissa Chai says:

    I fully agree with the statement that ethics is about not “making decisions that are harmful to others and inconsistent with the beliefs and preferences of the decision makers’ conscious”. The problem with most regulators, industry practitioners and company management is they seem to think that increasing the level of compliance paperwork will somehow improve ethics. For those of us who are at the front line and make business decisions everyday, we know the challenge of upholding ethics. Being legal doesn’t mean ethical Being ethical can mean that you will not be the top dog or the best performer. But how many of our KPIs include “being ethical in our business decisions”? How many of our company leaders actually give a speech about being ethical whilst pursuing our business goals? How often is a sucess story about ethics being broadcast and rewarded? I am resigned to the fact that being ethical is a personal choice because it is more than being legal and compliant. It is a value that most people pay lip service to but for those of us in the financial sector who believe that we are accountable to more than our company, our bosses and our regulators, we will continue to do our best to practise it and that motivation to do so is intrinsic.

  3. Tony Tan, CFA says:

    Thank you for your interest in this topic. Perhaps being ethical may not make one a “top dog” or “best performer”, but it certainly allows one to sleep well at night. In fact, this “sleep well” theory is premised on “if a decision causes you to toss and turn in your sleep, it probably is impacting your inner conscience and moral upbringing. As one grows older, the trade-off is your health.” This is simple if a decision is between right and wrong. What if the decision is between right and right. Watch for more on this in my future blog postings.

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