Assessed Essay in Ethics in Investment Management

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Assessed essay
Module: Ethics in Investment Management
Module Leader: Dr Carol Padgett

Student: Zhenyu Wu
ID: 21003053
2013-2-11
2013-2-11

Table of Contents
Table of Contents1
Introduction2
Five Key Concept of the IFP2
The Comparison of Code Ethics between the IFP and the CFA4
Failures in Ethics and the Employers’ Responsibilities5
Conclusion7
References9

Introduction
Generally, ethics is closely related to human behaviour whose aims are to judge if something is “right” or “wrong” based on the conventional morality, which includes honesty, integrity, fairness, respect for others and so on. It also has a great impact on all aspects of life, especially on the financial world. As a results, ethics in finance should play an important in decision-making of commercial or financial activities.

In fact, the Institute of Financial Planners (IFP) requires its members to obey some strict rules about financial ethics, which are based on five key concepts. The key concepts include integrity, objectivity, competence, confidentiality and courtesy.

This essay will first explain the meaning of the five concepts according to the requirement of the IFP. Secondly, it will make a comparison with the Chartered Financial Analyst (CFA) institute code of ethics and will indicate the differences between them. Finally, it will discuss some factors that will lead to a professional to break the code of ethics and analyse the responsibilities of the employers for these factors.

Five Key Concept of the IFP
The five key concepts of the IFP are integrity, objectivity, competence, confidentiality and courtesy, and the member of the IFP is obliged to adherence to these key concepts.

1. Integrity
According to the IFP (2012), “integrity demands honesty and candour which must not be subordinated to the member’s personal advantage.” It also implies that any activities related to deceit or subordination of one’s principles are prohibited. On the other hand, a financial professional should build a clear professional relationship with their clients in order to take the responsibilities to their clients and also to deal with the conflict of interest between the clients and the financial professionals.

2. Objectivity
According to the IFP (2012), “objectivity is an essential quality for any professional.” Objectivity requires the professional to put the clients’ interest ahead of their own interest and to give financial suggestions based on the clients’ interest. It also requires the professional judge from an objective point of view while providing the financial services.

3. Competence
The IFP (2012) requires its members to maintain a high level of knowledge so that they can continuously providing the financial services in high quality. In this case, a professional should keep on learning and improving his or her own ability. As the financial markets are full of changeling and uncertainty, a professional should only provide financial services in his own knowledge or ask assistance from a third party which can meet the clients’ needs.

4. Confidentiality
Confidentiality is necessary while the professional are providing the financial services. The professional should protect the privacy of their clients as the relationship of trust has already been built between clients and the professional. All the activities that will reveal the clients’ personal information without the approval of the clients are not allowed according to the IFP (2012).

5. Courtesy
Courtesy in the IFP (2012) means the professional should show their respect for their clients, colleagues, employers, and all the people or parties they will meet in their work. It is also considered to be a very good manner both in the daily life and in the financial world. The Comparison of Code Ethics between the IFP and the CFA

The code of ethics in the CFA Institute is essential to...
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