Agent Ethics
A Moral Obligation
Chapter 3
Family Obligation
There are many reasons for deciding in favor of morality, but perhaps the strongest is our families. What we do, say, and believe reflects far into the lives of our children. There is no greater legacy than the love and character we provide for our children. While we have adult responsibilities that children cannot understand, we must still take time for our children in some way. The mother who is too busy to let her children know they are important will impact the way they relate to their own children. The loving parent will also affect how their child relates to their own children. A parent’s actions will teach their children whether it is all right to steal, cheat, or lie. Notice we said “actions.” A parent can say anything they want, but the child will notice actions far more than he or she will notice words. Perhaps the greatest legacy of all is love. No matter what other mistakes may be made, love will erase most effects.
Most people hope others will remember them. Those most likely to remember them will be family members. Our families are our legacies. Rich or poor, thoughts of us will remain far past our deaths in the minds and hearts of those close to us. Love and hate both bring out strong memories. For many, the desire to have love carry on our memory is reason enough to remain strong, ethical people throughout our lives. Our children are the primary family members who will remember us throughout their own lives. Parents are a child’s first teacher and role model.
One of the first things a young child begins to realize is how to socially interact with others. When a child grabs a toy from another, he or she may be rewarded with a thump on the head. That thump on the head teaches the child the potential results of a greedy act. Of course, the child may simply resort to being more cunning, but if the parent reinforces sharing, the two together will begin to form a way of living that will follow into adulthood.
On the other hand, if the parent does not reinforce the need to share, but instead coaches the child on how to manipulate other children, that too will follow into adulthood. The shift from securing our own interests to sacrificing for another is the first step in learning to make ethical decisions. No parent wants their child to be timid and afraid of others so that giving is not an ethical decision, but rather born of fear. Learning to share should not be about fear of another head thumping; it should be based on a desire to do the “right” thing. Morality is the shift from self-interest to majority interest. That is true for socializing children and ethical theory.
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Morality is the shift from self-interest to majority interest. |
Some feel that a selfish person is not able to habitually make moral decisions. Not all agree with this theory. All too often these types of theories allow individuals to shift the blame off themselves and on to others. If the theory says a selfish person is not able to be moral, then why would such a person even try to be ethical? It allows a person to say: “it’s not my fault. I can’t help doing what I do.” Perhaps allowing a person to pass the blame to another is unethical in itself.
The states are beginning to mandate educational training as a way of thwarting the “reasons” for wrongdoing. An agent who has completed an ethics course has been given the necessary tools to make an ethical decision in the workplace. Some ethical decisions are obvious (it is both unethical and illegal to copy a client’s signature on an insurance form) while others might be a matter of knowing the state’s laws.
Free Choice
Each person, even children, makes multiple choices each day. They range from simple ones, such as what to eat for lunch, to the complex, such as whether to continue a marriage. These choices have many factors. While many of our decisions are not so much based on ethics as it is the quality of our lives (such as marriage and divorce), others can have a profound effect on others (such as placing appropriate insurance contracts).
Everyone wants free choice in his or her life. It would be hard to imagine that anyone voluntarily giving up free choice. Wars have been fought over this right. With free choice, however, comes responsibility. From the simple to the complex, there are always some measures of responsibility in any decision we make. Sometimes the responsibility is merely personal (is there too much fat in what I have chosen for lunch?); sometimes the responsibility is much larger (how will a divorce affect my children?). Whatever the issue, if a feeling of how our choices will affect others is not present the full measure of our responsibility is not felt. Moral points of view must always have a willingness to look at the interests and needs of others. For the agent, the best interests and needs of others usually have a financial consequences. The products we sell can affect our clients for many years. When we offer an appropriate product, our reward is a commission payment. Therefore, the interests of our clients and ourselves can be successfully combined. The hope in an ethics course is that each person will consider others as well as themselves. By doing so not only the lives of our clients will benefit; ours will as well because happy clients produce referrals if not loyalty. Even if ethical professional conduct were to bring about no referrals or client loyalty should that be a factor in our ethical decisions? Should that change how we make our choices? Not if we are moral people. Morality is not about reward; it is about having an ethical base to our lives that we follow because it is the right thing to do.
Plato, one of the best-known western philosophers, believed that a human being was composed of appetites, will, and reason. To be happy, he further believed that an individual’s reason must control his appetites and will. An immoral person was one who had allowed reason to lose control. Plato believed when will and personal appetites gained control unhappiness resulted.
Are immoral (unethical) people happy? Some very unethical people certainly seem to have happiness. Of course, it would be hard to know if they are actually happy or not. Simply being wealthy does not ensure happiness although, given the choice, most of us would prefer wealth to poverty. While wealth does not ensure personal values, it does insure a full belly and a warm home. It should also be pointed out that one person’s views on ethical conduct would not necessarily match the views of others. Even so, we have seen some national leaders who were unethical by just about anyone’s standpoint. They were in a position to do great harm, even to their own people, and chose to do so. Were these people happy? Unfortunately, many of them probably were and this is the problem with implementing ethical behavior in our society. We would like to show that unethical people are unhappy or unfortunate in some way, but that cannot be done. Whether an individual is happy will depend on many things, but not necessarily their ethical values.
History has shown that prominent people, both ethical and unethical, do not always gain happiness although they may have gained wealth and power. Power seems to be their undoing more than wealth. Powerful people have often experienced depression, anxiety, feelings of paranoia, and isolation. Of course, even the non-powerful can experience these emotions, but it is interesting to note the significantly higher proportion of powerful people who become paranoid, depressed, and isolated.
We often believe that the poor will be more ethical than the wealthy, but there does not seem to be any correlation. Politicians like to make their poor childhoods known. However, it is not the possession of money that forms one’s ethical views. Ethical views come from many sources, but seldom money. The confusion probably comes from the fact that unethical people often seek out wealth. Since greed and self-interest is often part of unethical behavior this is not surprising.
Greed is often associated with unethical behavior. Not a surprising fact, since greed is an unethical quality. It has been said that the love of money is the root of all evil. However, without money many good and charitable projects could not be completed. No matter how good we are, if we have no money, we have no ability to help others financially. Love of money and greed is very much the same. Greed has been the motivating factor behind much of the environmental damage that has occurred; it has been a factor behind corporate mismanagement; and a factor behind many social injustices. Greed is the selfish and grasping desire for possession, primarily of money. Perhaps all of us have some measure of greed, especially in the right circumstances, but when greed becomes a consuming part of one’s life, it truly can become evil.
Egoism
Not all modern philosophers believe as Plato did. Some feel it is not necessary to consider the needs of others when making choices. Those who feel this way are called egoists (not to be confused with egotists). One type of egoism is “psychological egoism.” It maintains that people always act in their own perceived best interest. Psychological egoism is about how people do act, not about how they should act. Therefore, it is not an actual theory. Even though it is not a theory, it is an interesting concept to philosophers because it is often the basis of other actual theories.
One theory is ethical egoism. This theory maintains people ought to behave in their own best interest at all times. Even so, this theory also recognizes that people do sometimes act contrary to their perceived best interests.
It would be hard not to recognize that people do not always act for themselves. Love for another often explains generous acts, but often such actions are directed at strangers. Who could forget the man, following the plane crash in the Potomac River many years ago that continually passed the rescue rope that was given him on to another? Time and time again he watched someone else pulled to safety, while he eventually drowned leaving behind a wife and children. Why would he help so many strangers before himself? The true believer in egoism theories might offer the fact that people often do not recognize that their self-interest is factually flawed. In other words, they may not recognize that they have a false picture of the facts. For example, perhaps the heroic man in the Potomac River did not expect to drown. Instead he pictured himself becoming a hero and getting lots of public attention, which in turn would help his business, which in turn would bring him greater wealth. Although he was acting in his perceived own best interest, under this theory, his facts were flawed. It is doubtful that his wife and children would believe this.
Not surprisingly, many philosophers do not agree with ethical egoism. It is often called contradictory, despite attempts to rationalize it.
Objectivist Theory
Another theory is that of objectivist ethics. This theory takes a survivalist approach to ethical conduct. Under it, good or evil is determined by a person’s life. Since reason is the basic means of survival, whatever brings thinking and productive work is good. Anything contrary to that is evil. To state it another way, if an action produces or conserves life, it is good; if it prohibits life, opposes, or negates it, then the act is evil.
It should be noted that thinking is the prime element in objectivist ethics. Those who merely follow, while conforming to the basics of the theory, are not actually following it. A person who merely follows will not necessarily follow the right person.
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An ethical person must think for themselves. A person who merely follows another will not necessarily follow the right person. |
In addition, those who use brute strength to prey off others are not acting according to reason or thinking. Therefore, they oppose that which is good. When brute strength is used to take away from others, it is considered evil under this theory (and probably most others) because they are not adding to life, but rather taking from it. Reason and thinking are the only ethical forms of conduct under this philosophy. It should be noted that this theory does not state what must be thought, only that it must relate to producing or continuing life. Under this theory any person’s life is the standard of value with one’s own life being the ethical purpose. The standard value is a measuring stick but continuing one’s own life is the specific purpose.
How would objectivist ethics work for the insurance agent? If we use this theory of ethics it would state that every client is the standard of value with the immediate client being the ethical purpose. It could also state that every client is the standard of value with the agent’s immediate well-being the ethical purpose. Either way, there is a standard of value.
Example #1:
Agnes Agent takes time with each of her clients. She analyzes their personal situation focusing on financial security today and into the future. While all her clients receive her personal attention, when she is focusing on a single client all her resources and time go to that particular client, even if there is service work waiting for her for other clients.
In this example, all her clients are her standard of value, with the immediate client being the ethical purpose.
Example #2
Agnes Agent takes time with each of her clients. She analyzes their personal situation focusing on financial security today and into the future. Even though she makes a point of helping each of her clients, she is also aware that she must pay her own bills. Agnes looks at products from many companies concentrating on those that offer a value to her clients and a satisfactory commission for her.
In this example, Agnes is using her clients as the standard of value, with her own financial wellbeing as the ethical purpose.
In both cases Agnes is being professionally ethical because she is making her clients a priority, even though in the second example she is weighing her own self-interest highly. It is not morally wrong to consider one’s own self-interest as long as the interests of the clients are also valued. It would be wrong to consider self-interest without giving equal concern to the policyholders.
Ethics generally state that some type of productive work is the central purpose of each person’s life. Rationality is each person’s basic virtue. Therefore, one might say that objectivist ethics is the thinking man’s theory of ethics. Preserve all life but preserve your own first. The book “Making Ethical Decisions” states in part regarding objectivist ethics “that man must live for his own sake, neither sacrificing himself to others nor sacrificing others to himself.”
Cultural Ethics; Perceptions of Ethics
What is or is not ethical is not the same for all cultures. As we have said ethics is not a set of rules. Ethical behavior is based on what an individual perceives to be right. Ethical conduct does not require agreement from others. In fact, ethical conduct does not even require that it follow the established laws of a culture. It merely requires that the individual do what they perceive to be the right thing.
With the mobility we have today, there is the potential for moral standards to clash. As people move from one country to another, it is not unusual for behavior to become misplaced. In other words, a person from one culture may be living in another culture causing their perceived moral conducts to clash. In the US we have had instances where men were prosecuted for beating their wives. The prosecution confused these men because it was accepted behavior where they came from.
One could easily argue that hurting another person is never ethical but remember ethics involve perceptions of what is right. They do not demand agreement. That is why reason and logic are so important in determining ethical behavior. America does not condone injury to another person. Therefore, our role becomes one of changing the perceptions of those who come to America from different backgrounds. We must either change the ethical standpoint of people from other cultures or create an atmosphere that prohibits certain actions (fear of prosecution) for those who come here. There are not likely to be any other choices since such violence cannot be legally tolerated in our society. That is not to say that America does not have violence because, as we know, we do. In fact, some countries consider America to be very violent.
Differences in culture will always bring about differences in perceived ethical behavior. These differences are not only concerning beliefs; they also involve such things as economic development, literacy, scientific advancement, and health related issues. Western cultures often have the mistaken belief that parents in poor countries are glad to have their children adopted out, due to the poverty experienced there. We fail to recognize that poverty does not stop the love of one’s child. The parents may voluntarily give up their children so that they may have a better life, but it does not mean that they feel it morally right to do so.
Technical advancements may alter how we view morality. The ideal example of this has to do with the sexual revolution America experienced. When birth control became easily available and primarily effective, people began to form new “moral judgments.” Did our perceptions of right and wrong change or did we merely justify our actions since it became safer to sexually interact?
The changes that we saw brought a new set of consequences, but those new consequences were not foreseen, so the question remains the same. Can ethical behavior change due to scientific developments? There are many medical changes that bring up this question. We have the ability to prolong life, but often no quality of life exists. Should life be prolonged at all costs? Should the bulk of our medical dollars be spent on a fraction of our population? That is currently the case. Statistically, the majority of our medical budget is spent on a fraction of our population. The government spends most of the medical care dollars on the elderly population, primarily to care for them in nursing homes. Children receive much less money, even though they comprise the majority of the caseload. What is the solution? The elderly must be cared for. Should that care continue even if it means that children do not get the care they require? How long should life be preserved if it is to be preserved at all costs?
There are many questions regarding ethics that do not have easy answers. Therefore, the debates continue. Both sides feel they have the answers. Many times, if facts can be clearly seen, debates will be eliminated. The problem is, facts seem to be on both sides, so whose facts should we accept?
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Philosophers often maintain that all disagreements about ethical conduct are nothing more than disagreement about the facts. |
Philosophers have sometimes maintained that all disagreements about ethical conduct are nothing more than disagreement about the facts. Most cultures and groups do seem to agree on basic fundamental elements. These would include the need to preserve life, feed and clothe people, and provide basic comforts. Under each basic agreement, though, are multiple areas for disagreement.
Governments enforce physical compliance with required behavior since ethical agreement cannot be forced. In other words, we cannot force all agents to agree with ethical behavior, but we can force compliance with laws or the threat of punishment if the laws are not followed. Most agents do not overtly intend to injure their clients financially. Rather the agents behave badly due to self-interest or lack of training. The states hope that mandated education and required insurance procedures will provide the tools necessary to affect agent performance. When the agents still perform in ways that are not allowed, the states then have the ability to restrain them through fines or removal of their licenses.
Moral Persuasion
Some changes in ethical convictions come from persuasion. People who persuade others are called moral reformers. In many ways, religions are moral reformers. While there are exceptions, religious moral reformers are nonviolent people who attempt reform through reason or logic. Sometimes religious moral reformers combine their persuasion with social services, such as providing meals to homeless people or providing drug or alcohol treatment programs.
Agents use persuasion to sell their products, but they are not moral reformers. A moral reformer is attempting to change how one perceives themselves and others. Agents use persuasion to sell an insurance product; they persuade the buyer that he or she needs what the agent is selling. Whether that is true depends upon the views of the individual, but it is true that many consumers have benefited from the persuasion of an agent.
The best agent is one who believes in what they are persuading others to do. In other words, does an agent really believe it is necessary to purchase an annuity product for retirement if he or she has not done so personally? It would seem that the agent who truly believes this would have done so for himself or herself. Can they justify such a product for their client if they do not also have one for themselves?
Most people find it easiest to tell others what to do when it does not affect them personally. For example, America fought a civil war to free slaves, which the North thought to be unethical and, therefore, intolerable. However, the North did tolerate, (even condone) sweat factories, which often employed young children from other countries. Our railroads were built by immigrants who were barely tolerated, except as cheap labor. Many historians feel those who kept slaves, ran factories, and built the railroads did not really acknowledge it as a moral issue. Rather it was an economic issue that was simply rationalized to be moral. There is always an excuse for the behavior: Africans were characterized as subhuman; young children were said to be helping the poor earn an income; and railroads were for national security and development. When greed is involved, there are always rationalizations available.
What rationalizations do agents use? Agents know they are not allowed to use premium dollars personally, they know they are required to give full disclosure on products, and they know when they are using a product for the commission paid. While ethic classes may take away their excuses, there is doubt that it will actually promote ethical behavior since there are always new rationalizations available for those who are unethical.
Rationalizing Morals
All of us want to appear as honorable people. Sometimes what we perceive as honorable clashes with our personal desires. In such a case, human beings tend to rationalize their behavior.
Whether it is an agent selling a low-quality product or a factory owner rationalizing child labor, human beings seem adept at making him or herself look better than they deserve. It is likely that agents know when they are selling a product that is not best for the consumer. New agents may have the luxury of ignorance, but even a new agent has the ability to read a policy. If he or she has not taken the time to fully read that which they are selling, then they have not fulfilled their due diligence – a requirement of any professional.
Every agent is required to perform due diligence. Cheryl Toman-Cubbage in Professional Liability Pitfalls for Financial Planners states that due or reasonable diligence involves a reasonable investigation into the financial products prior to recommending them to clients. The due diligence investigation may be conducted personally by the agent or by others who have proven themselves reliable. Reading the policy prior to selling it is one aspect of due diligence since it would seem unlikely that any agent could fully understand the product if he or she has not actually read the policy. Due diligence may also involve investigating the issuing company. Certainly, the agent should at least check the financial rating of the company. Highly rated companies always provide this information on their brochures, but the library will also have the books necessary to look up financial ratings of insurers.
Agents must understand the products they sell. Those who sell life insurance must understand the life products that are available. The library will have books on the subject, so a new agent is not totally alone even if self-employed. By reading industry books agents will better understand how their products fit and where they should not be sold.
Rationalizing how we work is easy to do. “I haven’t had time to check out the new company, but it looks okay to me.” “I know the other product pays less commission, but I think this product is probably just as good and it pays better.” Ultimately, from both a legal and moral standpoint, agents are responsible for their due diligent requirements.
Rationalization can become confusing. Is what we are doing right, or have we allowed someone else to rationalize it for us (such as industry recruiters)? Were we sold on something that is actually unethical? Remember that the basic approach to ethical conduct is logical thinking. Remember also that facts can be used to strengthen just about any point of view, even opposing ones.
Most people are busy and taking the time to fully investigate an insurer or an insurance product is time consuming. As a result, most agents rely on industry watchdogs, such as A.M. Best or one of the other insurer rating companies. However, it is necessary to always read any policy that will be sold. This is not time consuming and it does prevent many potential errors.
The variability of moral judgments will always exist. Even religious leaders often disagree about religious matters. Lawyers disagree about legal matters. Doctors disagree about medical matters. Disagreements do not cause problems. In fact, they often lead to better education for everyone as various views are brought into focus. As long as logical fact-finding is the goal, disagreements can be enlightening.
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Disagreements do not cause problems. In fact, they often lead to better education for everyone as various views are brought into focus. |
Agents will never totally agree on which products best serve a client (which is partly why insurance is a replacement business). Since there will always be disagreements about product superiority agents must know the contracts they are selling and be prepared to defend their viability. This is not a field for a passive view.
End of Chapter 3