E&O Insurance

Chapter 5

Professional Ethics

Industry Ethics

  Each industry needs to practice a code of ethics and insurance and financial planning is no exception.  Of course the hope is always that there will be self-regulation.  To some extent, that has happened.  The college for Financial Planning, with its Certified Financial Planner educational program, the IBCFP with its certification requirements, CFP and Certified Financial Planner, and the IAFP’s Registry of Financial Planning Practitioners have helped to keep an ethical awareness in the industry.  All of these colleges deal primarily with increased education, but with that education also comes an increased awareness of ethical requirements.

  Originally, very little regulation existed for financial planning.  Perhaps the leader in correcting that was Senator Joseph Montoya of California who, in the 1980s, introduced legislation to regulate the industry.  Of course, even before this there were licensing requirements for insurance and securities.

  The primary concern when regulation is considered is consumer protection.  The truly competent agent and financial planner is not the problem.  Rather it is the person who professes to have education or training that does not actually exist. There are other reasons for regulating the financial planning industry:

1. to specifically state what designations or training must exist before a person can claim to be a financial planner;

2. to give the industry a sense of professionalism and high reputation;

3. to prevent duplication of services, inconsistent services or incomplete services.

Personal Ethics

  We would hope that each individual, regardless of their profession, has a personal desire to demonstrate honesty and competency.  Unfortunately, few people would consider themselves either dishonest or incompetent, even if they were.  As a result, it is often left up to legislative measures.

  Most regulations come from the individual states.  The states themselves are not uniform; laws vary from state to state.  Whatever the laws happen to be, however, they are aimed at protecting consumers.

  Although legislation is a necessary part of keeping the industry ethical, the most effective avenue is education.  Educated agents and financial planners are less likely to make the types of errors that cause harm to consumers.

What Are Ethics?

eth'ics (eth'iks) n. pl. (1) the principles of honor and morality.  (2)  accepted rules of conduct.  (3)  the moral principles of an individual. ---eth'ic, adj. pertinent to morals.

The New American

Webster Dictionary

What are ethics?  Who determines what is or is not ethical behavior?  Must religious beliefs be a part of ethical behavior?  Is it possible to make your living in commission sales and still be ethical?  Perhaps more to the point, is it possible to make a GOOD living in commission sales and still be ethical?

  While the study of ethics is actually a complex matter with many shades of right and wrong, basically ethics is about the meaning of life.  It is the abstract view of what is right and what is wrong.  There are few absolutes and many varied definitions.

  Ethics began as society's code of unwritten rules.  From the time that humans began living together, such codes of unwritten rules were necessary simply to survive.  These rules established the way in which others were to be treated. 

  For centuries, societies have argued over what is ethical or moral.  It was during the fifth century BC in Greece that the philosopher Socrates gave ethics its formal beginning.  The word ethics comes from the Greek word ethos, which means "character."

  Ethics involved the questioning of why certain things were done or thought.  Socrates' student, Plato and later Plato's student, Aristotle, further developed Socrates' philosophy of ethics.  Some say that their thoughts on ethics were so profound and complete that nothing new has been said since Plato or Aristotle on this subject.  We will explore the role ethics plays as it relates to the insurance field and to personal actions in general.

  As insurance representatives, we do not have the answers to the big problems, but we are often a mirror of what is going on in our neighborhoods.  If, as individuals, we are surrounded by people who are primarily concerned with themselves, then it is likely that we will have that same attitude.  Therefore, if the agency in which we were trained stresses SALES, SALES, SALES without any other input, it is likely that we will lose sight of the role that ethics should play.  When ethical behavior is not deemed important by our immediate peers, it is not surprising that problems eventually materialize.

  Setting down our priorities determines our goals in life.  Ethics help us set goals that will bring about pride in ourselves and our achievements.  Regardless of our personal circumstances, it is always possible to have a moral code (a code of ethics).  Even those in dire circumstances have reported this.  Viktor Frankl, author of Man's Search For Meaning, discovered that even in the brutal confines of Auschwitz, a concentration camp, people could still choose to have a moral basis to their life.

  It might be said that ethics are a recipe for living.  Our code of ethics gives each of us our personal rules and values which determines the choices we make each day of our lives.  These choices affect not only ourselves, but everyone around us.  Some types of ethics tell us what not to do (it is wrong to steal, so we must not do so).  Others tell us what we ought to do (be kind to animals).  In addition, there are those ethics or morals that actually take us beyond the basics of moral obligations.  Mary Mahowald, a medical ethicist at the University of Chicago, calls this added ethical stand virtues.  Virtues might be referred to as going beyond the call of duty.  It may also be referred to as moral excellence.  Such moral excellence would include those who have no legal or moral duty to another, but goes to extremes to help them anyway.  It refers to the person who gives their life for a stranger or goes to other countries to work for people they do not know, even though there will be no financial rewards at all.  Virtue is going beyond what we are obligated to do.

  Ethics is never a separate part of our lives.  It is part of everything we do and everything we say.  Ethics determine how we treat those we know and how we treat strangers.  Ethics determine our actions in financial and public matters.  Ethics belong in every profession and are especially needed in some.  Because ethics, as a subject, is so broad and complex, it may sometimes be divided into sections such as personal ethics, religious ethics, legal ethics, professional ethics, medical ethics and so forth.  Ethical neutrality is not possible.  Rather, it seems to be a way of avoiding some issues.

  In today's lawsuit prone society, the wise insurance agent or brokerage will make a point of following state regulations, but ethics actually goes beyond what is simply mandated by state or federal governments.  Ethics define who we are.  A man who tells constant lies is known to others as a "liar" (although studies show that 90 percent of us lie regularly).  A man who steals is known to others as a "thief".  An insurance agent who is unethical will also earn a reputation for such.

  It has been said that legal authorities may be able to mandate behavior, but not ethics.  Technically, this is probably correct.  A person who would like to steal may not do so because of the consequences such behavior would bring about.  Therefore, his behavior is controlled, but his ethics are not.  Although he does not steal, he would still like to.

  Controlling a person's behavior may, however, eventually lead them to an understanding of ethical behavior.  It is not unusual for an individual to become the person they pretend to be.  A person who acts ethically, even if they do not desire to be, may eventually soak in the ethical behavior and adopt some of that potential.  In fact, since morality is about the way we live, we do learn it over our entire lifetime.  To think that a person who is not ethical today will never be ethical is simply wrong.  In fact, it could go the other way as well.  The person who is behaving ethically today may not do so tomorrow.  Even so, it is true that most of our ethical behavior is learned during childhood and adolescence.

 Many of Americans at least partially arrive at their code of ethics through their religion.  In fact, the Bible sets down many prescriptions for ethical behavior.  The Bible is probably the best known source of sound ethical advice.  Even so, not all have agreed with the concepts stated there.  Karl Marx, the father of communism, called religion the "opiate of the masses."  Even Sigmund Freud, the father of modern psychology, regarded organized religion as institutional "wish-fulfillment."

  As we stated, moral or ethical conduct is continually learned.  Susan Neiburg Terkel reported in her book titled Ethics, when Mahatma Gandhi, India's beloved leader in the struggle for independence from England, was asked why he had changed his views over the course of a week, he explained, "Because I have learned something since last week."

  It is doubtful that any person is only good or only bad; each of us has shades of each.  We continue to learn as new ideas are presented and new experiences encountered.  Unfortunately, if we have been poorly educated on ethical conduct, we might be faced not only with leaning the basics of ethical behavior, but unlearning bad conduct as well.

  Ethics are not always merely a matter of how we think and act.  Often it is also a matter of character.  So many things come together to form our character that all must be taken into consideration.  Values, principles, emotions, plus many other factors all contribute.  There is little doubt that each of us are influenced by others.  Even so, for each path chosen, we alone must take responsibility.  Each of us has the ability to build, change, or destroy our own character.  Part of our character is, of course, our ethical guidelines.

  It should be noted that no single act defines our personal character.  Each of us has likely participated in an act that was wrong.  That one action does not define our total character just as one kind act does not build our entire character.  Character is more a matter of adding and subtracting our actions and thoughts.  A good person can do something unkind, yet still be a good person.  A bad person can do something kind for another and yet remain basically a bad person.  We refer to these isolated deeds as being "out of character."  An action that is not consistent with normal behavior is not likely to form or change the character of a person (although that single action can affect another in either a positive or negative fashion).

What Motivates Ethical Behavior?

  Probably every religion stresses our need to give to the poor.  While it is certainly true that the poor do need help, the reason we need to do so goes beyond that.  When we do something for another, without any self-interest involved, our personal gain is often much higher than any gain realized by others. The true giver helps others quietly. To help others, and then loudly proclaim your deed, is likely a selfish act with a personal gain sought, rather than true giving.

  What does this have to do with ethical behavior?  Ethics is not entirely about yourself; it is also about others.  It is not so much what one knows that makes an individual ethical, but rather what he or she understands.  A truly ethical person realizes that their behavior is their loudest statement about themselves and those they associate with.

  Making ethical decisions addresses four basic issues:

1) Is it possible to teach ethical behavior?

2) What is the scope of ethics?

3) What does it take to be a moral person?

4) What is a person's responsibilities to other moral persons?

  There is no doubt that each of us, regardless of our occupation, faces ethical issues on a daily basis.  However, anyone in an occupation that has a "public interest" is especially faced with ethical issues.  Because insurance and financial planning certainly have a public interest, ethical codes of conduct are especially important.

  Ethics are standards to which an insurance agent or broker must aspire to; it is feeling a commitment to each client.  Every type of profession tends to have an informal code of ethics which may sometimes be more understood than written.  Ethics are a means of creating standards within any given profession to upgrade it and give it honor.  It is a means of measuring performance and acknowledging outstanding individuals.  Ethics are often a means of providing priorities and building traditions based on integrity.

  It would be hard to imagine doing business with anyone that we knew to be unethical.  Can you imagine turning over the control of your financial affairs to an attorney that had been convicted of stealing from his clients?  Would you buy a car from a person who had knowingly lied to others about the cars he represented?  Would you deal with an insurance agent who had repeatedly misrepresented the products he or she sold?  Ethics are the only element, other than legal mandates, that add an element of trust to many industries.  It is very difficult to mandate ethics. Only behavior, as we previously stated, may actually be mandated.  If a person is ethical, that is something within themselves that simply adds to their trustworthiness.

  No matter what our profession may be, as individuals, each of us faces ethical issues each day.  Some are very simplistic in nature while others are complex and may have many sides (and many correct answers) to them.  We face issues that are personal, such as How much should I give to the poor? Is it wrong for me to take drugs?  Should I report someone who is cheating?  These types of ethical questions are all around us.

  Some types of ethical or moral questions can be directed to our religious institutions for support in determining the right answer.  Sometimes the answers can be found in our legal system.  If our state or federal government says commingling funds is illegal, for example, then we could also state that it must be unethical as well.  Sometimes, determining what is ethical is simply a matter of what feels right emotionally.  We have all said or heard someone else say "It just doesn't feel right."  That feeling of right and wrong is probably the result of our childhood upbringing.  Even if we do not distinctly remember being taught that a particular action is either right or wrong, somewhere in our upbringing or past experiences, we have received such teachings.

  While this course cannot instill ethics into anyone who has none, it may provide the tools for determining the more complex issues.  By using basic concepts and theories and by having an appreciation of what constitutes an ethical solution, decisions may be made on the basis of reason.

  It should be noted that different conclusions may be reached to the same ethical question.  It does not mean that one solution is right and another wrong.  Ethical questions often have multiple answers, all of which may be correct.  Many ethical questions involve multiple hues; some decisions may be based solely on facts, while others may be based less on facts and more on emotional factors (or what simply feels right).

  We asked the question: Is it possible to teach ethical behavior?  This, of course, depends upon multiple factors.  First of all, does the person desire to be ethical?  As with all things, the person must want to achieve the goal at hand.  If other goals are more important to the individual, then it will perhaps not be possible to teach ethical behavior.  If, however, ethical behavior is important to the individual, even if other goals are also sought, ethics may be taught.

  One of the first lessons taught to children by their parents is sharing.  Probably few parents think of this as "ethics", but it is.  Sharing is the opposite of greed. As adults, we learn to share in numerous ways, but sharing begins as children.  The shift from securing our own interests to sacrificing on behalf of others is an essential part of what is meant by "ethical decision making."  This may especially come into play for insurance agents.  The choice to make a sale and earn a commission in any way necessary rather than sacrificing the sale on behalf of honesty is an ethical decision.  The selfish person cannot routinely make such moral decisions, or perhaps more correctly will not make such decisions.

  It is necessary to understand that one of the general features of taking an ethical point of view is a willingness to take into account the interests, desires and needs of others.  A person may argue that it is necessary to look out for one's own interests, desires and needs.  While this is certainly true to a point (we must clothe, feed and house ourselves and our families), taking our own interests into account need not mean making unethical or immoral decisions regarding others. Even commission salespeople are able to make a very good living while still maintaining ethical behavior.  In fact, the best salespeople do not need to behave unethically because they have mastered their trade through the development of communication skills and professional training.

Egoists

  Not everyone believes it is in their own self-interest to be ethical in their behavior.  Some who reject the idea of other's interests and desires are termed egoists.  Do not confuse this with egotism.  An egotist is a person who is self-absorbed or stuck on themselves.  These people make poor egoists.  Webster's dictionary defines egoism as the doctrine that self-interest is the basis of all behavior whereas egotism is the habit of being too self-absorbed, talking too much about oneself or conceit.

  Psychological egoism maintains that people are always motivated to act in their own perceived best interest.  Psychological egoism is not an ethical theory since it does not tell people outright how to behave.  Rather it attempts to explain why people behave in certain ways.  Ethical theorists consider this theory, however, since it does have a bearing on their theories of ethical behavior.

  Another version of egoism is a genuine ethical theory.  Traditionally named "ethical egoism," it maintains that people ought to act in their perceived best interest.  An ethical egoist argues that people should act in their best interest at all times because it is good for the general economy (providing industry and jobs, for instance).

  Although ethical egoism and psychological egoism are separate and distinct, they are often meshed together by writers and speakers.  Psychological egoism is an explanation of behavior, not a theory whereas ethical egoism is a theory of behavior.  In many ways, ethical egoism can be substantiated by those who prescribe to it.  The English philosopher, Thomas Hobbes, was a well-known believer in ethical egoism.  Of course, the interests of individuals come into conflict with others whose interests are different.  This is where the greater interest comes into play.  Even while pursuing our own personal interests, it is possible for those interests to be swayed or checked by the interests of others because of possible consequences which one may wish to avoid.  That is how laws manage to control behavior even if they are unable to control ethics. Under the theories of ethical egoism, it is in the individual's best interest to follow the established laws because the fines or penalties imposed are not desired.

  In the marketplace we all try to buy low and sell high.  That is certainly an attempt to pursue our own self-interest.  It is unlikely that the buyer worries about the seller when buying low, nor does the seller worry about the buyer when selling high.  Individual self-interest is at work.  Even though this may be an excellent example of ethical egoism, it tends to be both orderly and productive to our society.  This points out that this theory has positive dimensions to it despite the selfish basis.

  A political economist, Adam Smith, believed in ethical egoism.  He felt that people, while being interested in their own needs and desires, created good for society as a whole.  Smith felt that economic conditions were created and expanded when people acted in their own behalf.

  There is more day-to-day heroism than one might realize.  Such simple things as the child who shares his lunch with another student, the woman who gives her last dollars to a homeless person, the man who donates his only day off for a food drive are all acts of kindness that consider the needs and desires of others.

  This still brings us back to the basic question:  Is it possible to teach ethical behavior to others?  There is no clear answer.  An agent who has never considered ethical behavior might suddenly begin to do so if the agency where he or she works begins a strong ethics campaign.  On the other hand, an agent might continue to act unethically even if threats are made to recall his or her license to sell insurance.  One thing is certain:  the effort must be made to emphasize ethical behavior because there will always be those agents who will respond favorably to such efforts.

  Question number two asked:  What is the scope of ethics?  This is a massive question that could be carried to great depths if we chose to.  In many industries, including the insurance industry, the professionals have knowledge that the general population does not have.  As a result, those individuals who seek out the professionals must rely upon their honesty and integrity.  Therefore, a feeling of ethical standards must exist.  It was the potential for abuse of power that provided a set of rules for what is commonly called "ethical behavior."  Sometimes, ethics are written standards which may be mandated by law on either a local or federal level.  The premise, upon which practical ethics must be based, according to Stephan R. Leimber of the American College where he is a professor of taxation and estate planning, is that power must be exercised in the best interest of the clients who seek the professionals out and may not be exercised solely in the best interest of the professionals themselves.

  Parts of the insurance industry have been labeled (often unfairly) as lacking ethical standards.  Usually what we find is not an industry as a whole without ethics, but rather some individuals who have received much publicity.  The insurance industry which deals with senior products is one section which has received bad publicity off and on.  Part of this has to do with the age of the victims.  If a 25 year old is taken advantage of, many would think he was simply stupid or uneducated to have allowed it.  If a 75 year old is taken advantage of, however, publicity is sure to follow.  This is not surprising since a 25 year old is more likely to have the ability to make sound judgments in comparison to a 75 year old person.  Also, our older population controls most of the nation's wealth.  If a salesperson (in whatever industry) is greedy and unethical, he or she is most likely to hit those with money.  That would typically be older people.

  When we look at what the scope of ethics is or could be, one might be surprised at the extent to which it could be taken.  Amy L. Domini and Peter K. Kinder have jointly written a book called "Ethical Investing" which looks at how our standards may even be brought into the field of investing.  For example, if an agent were an animal activist, would it be ethical for them to represent companies that use animals in the laboratory or for testing?  If a client is an environmentalist, should he or she invest in any type of investment that is detrimental to the environment?  The aspect of ethical investing will be discussed towards the end of this course, but these questions do illustrate how wide the scope of ethics can be.

  Sometimes, people or cultures do not agree on what is ethical behavior.  What one culture or society may consider ethical another may not.  Even within the same culture or society, people may disagree on what is and is not ethical.  We often see these differences between religions as well.

  Every person probably has some degree of greed or selfishness within them.  The ethical person realizes this possibility.  Since ethics is a code of values to guide man's choices and actions, the ethical person will bypass their own greed and do what is perceived as best for the majority of people or best for the person they are dealing with.  In choosing his or her actions and goals, constant alternatives are faced.  It is not always easy to decide which choice is best and ethical.  Without a standard of values, ethical choices would be very hard to make.  At some level, our religious background may set the standard of values by which we make our choices.  However we arrive at it, at some point, understanding of how others feel determines many of our ethical decisions.

  It is unfortunate that so many people perceive insurance with disdain.  Insurance is something that people really do need for the security of themselves and their families.  There is a remarkable story about an insurance salesman named Martin England, who was white and from the South.  He learned that Martin Luther King, Jr. was not adequately covered by life insurance.  Realizing the dangerous job Mr. King was performing, he was understandably alarmed.  In fact, he was so concerned that Mr. England began to try to contact Martin Luther King.  As you can imagine, that was not an easy task.  Finally Mr. England did succeed in getting Mr. King to sit down with him and allow him to present the situation as he saw it.  Martin Luther King, Jr. did buy life insurance from Mr. England.  Only a short time later, Mr. King was killed by an assassin.  Of course, his death was difficult on his family, but think how much worse it would have been had they also been left destitute.  An ordinary insurance man went to unordinary lengths to help another.  In the process, he earned a commission, but what he gave the King family was much more valuable than what he earned.

  The "ethical" person simply believes in right and wrong and chooses to do right.  The ethical insurance agent does not believe it is necessary to trample their potential clients in order to get the sale, they do not believe it is necessary to tell half-truths or leave out needed information.  Of course, it is necessary to be well prepared and to understand good communication techniques, but any job requires some type of skills.  In fact, it could be said that obtaining the necessary skills to do the job of insurance sales or financial planning is a moral obligation.

  It is common for ethical people to have some form of religion in their lives.  They make no apology for accepting God and religion into their lives and work.  Ethical people tend to be warm and caring by nature, it is said.  Whether or not this is true, we cannot say, but ethical people do certainly seem to place a value on others.  In fact, valuing others is an aspect of ethical behavior.  Perhaps you cannot have one without the other.

  It is not possible to be one person off work and another person on work.  Who we are is defined everywhere we go and in everything we do.  Three questions must be addressed:

1. What kind of person am I?

2. What kind of work do I want to do?

3. What do I want my legacy to be?

  Just as a man is defined by the lies he tells, and a thief is defined by his activities, we are defined by our everyday activities.  We do not necessarily have to be a liar or a thief to define ourselves as less than honest.  Many of our political figures are not actually dishonest and yet they are not perceived to be honest either.  How do we want ourselves defined?  Answering such questions cannot be avoided.  Even when we try to ignore them, we are still answering the questions by our actions.  It must be realized that the questions are asked in the minds of every person we come in contact with.  They look at us and they form opinions to these questions.  Coming to terms with the basic philosophical questions about what we are doing with our lives may be the most practical of all possible ventures.

  If we have children, it should also be pointed out that they are very good at defining who we are.  Children may not voice the image they see, but little is missed.  How do you wish your children to view you?  What you do in your everyday lives will form their opinions.  It will also demonstrate to your children what path in life they might take.

  When we ask What kind of work do you want to do? we are referring to the quality of your work.  Forging signatures, misstating health conditions, omitting information for the sake of a sale, and so forth, determines your quality of work.  True professionals simply feel their integrity is worth more to them than a quick commission.  Certainly, anyone can make an error and that may not be a reflection of their professionalism, as long as the error is corrected.  If an error is made (even an honest error), and no effort is made to correct it, then again that reflects on the type of work performed.

  The question What do I want my legacy to be? refers to how others will remember you.  Some may not care about this point, but it will be important to those who love you.  Most of us probably do wish to be remembered in a favorable light.  Can you imagine being remembered for the quantity of errors made or for the dishonest and unethical actions taken?

  Good business requires that you know what you are doing.  Sometimes this involves competency.  Of course, most people would not view themselves as incompetent even if they are.  Sometimes, the industry itself must remove those within it that are not competent.  Sometimes competency is merely a matter of obtaining required or necessary education within any given industry.  It is always interesting to note the amount of sincere education acquired by the leaders in an industry.  The leaders are nearly always more concerned with educating themselves to a greater degree than are those at the bottom.  Education and ethics do tend to go together.  It should be noted that success and education also go hand-in-hand.

  It is also important to know why you are doing what you do.  For insurance agents, that means it is important to understand why your industry and services are valuable.  We have all known an agent who seemed to just be going through the motions of their job (selling insurance) without any pleasure being received from it.  Whether a person is an insurance agent, a plumber or a teacher, there must be pleasure derived from what they are doing.  Unless there is some pleasure in the job, the job will be done poorly.  Few of us could do an outstanding job at something we hate.

  Often the reason an agent is not enjoying their job is simply because they do not understand why they are doing it.  If their agency has lost sight of ethics chances are their agents will not know why they are doing the job (beyond making money for the agency).  In the midst of the Watergate investigation, Jeb Magruder announced that he became involved because he had misplaced his "ethical compass."  Newspaper columnists grabbed on to that phrase and many jokes evolved from it.  The truth is, however, that it is a very fitting way to describe the situation.  The majority of people do know what is right and what is wrong.  That is not to say that, if surrounded by only one type of morality, that one's "ethical compass" cannot only be misplaced, but set off its direction as well.

 It is unlikely that most agents would consider who they work for to be a matter of ethics.  However, it may end up being connected if ethical behavior is not deemed important by the company.  When an agent (or anyone, for that matter) feels that their role day-in, day-out is primarily connected to making money without any regard as to how the money is made, ethics may easily take a back seat.

What are our responsibilities to other moral persons?

  Most people realize that they are responsible for their actions.  In sales, we often hear the statement "For every action, there is a reaction."  This is generally true in life as well.  It goes beyond the obvious situations (if you smack someone, they may smack you back).  If you are rude to a person, you may not realize the "reaction" at that moment, but one will surely follow.  The reactions may not always be noticeable to others.  This is especially true when it involves emotions, such as hurt feelings.  Since each of us are responsible for our actions, the question then is "Are we responsible for the reactions that follow?"

   Some reactions are directly tied to our actions and are predictable.  If we lie in order to obtain money, our actions are then directly tied to the reactions that occur.  What we did was deliberate and the "reaction" should be no surprise.  In such situations, we are probably responsible for the reactions.

  In other situations, we cannot be responsible for the reactions.  If we act in a responsible manner and a reaction occurs that hurts or offends others, we may not necessarily have any responsibility.  What a person does in everyday life is the result of multiple decisions made over their lifetime.  Those decisions include our perception of whom and what we are.  Our character (or lack of it) is made up of our day-in, day-out decisions. 

  Moral or ethical responsibility is not a single choice.  Such choices are made daily in many things that we do.  If we assume that our children are basically moral people, then what are our responsibilities towards them?  This may also be said of our peers at work.  If the majority of the agents at the firm we work for are ethical people, do we then owe it to them to also be ethical?  Since agents tend to work on their own, their contact may be minimal with their coworkers (other agents), but their actions still reflect on the company which then reflects on each individual agent or financial planner.

Establishing Our Identity

  Sociologists have contended that determining our own identity is not an easy thing.  Many people never realize that we are able to choose who we are by the choices that we make.  Certainly, we are influenced by many things, some of which are beyond our control.  Even so, most of who and what we are, we determine ourselves.

  Since reason is man's basic means of survival, it is not surprising that we have the ability to form who and what we are.  This is called Objectivist Ethics.  Since everything man needs has to be discovered by his own mind and produced by his own efforts, there are two basic points to becoming the person we choose to be: thinking and actions.  We decide who we will be and our actions carry out those thoughts.  To be an ethical person we must, through our thinking, choose to be so, and then productively work towards it.

  If some people do not choose to make any conscience choice, they will develop by imitating and repeating the actions of those around them.  This is why it is so important that agencies and management staff make ethical behavior a priority in the workplace.  Those who simply repeat the actions of those around them seldom make an effort to understand their own work.  Unfortunately, who is imitated is seldom a concern to these individuals.  As a result, one bad apple can, in effect, spoil the entire barrel.

Objectivist Ethics, as a theory of ethics, holds man's life as the standard of value and his own life as the ethical purpose of every individual man.  The difference between "standard" and "purpose," as used in this context can be important.  "Standard" is an abstract principle that serves as a measurement or gauge to guide a person's choices in his or her achievements or specific goals.  The goal itself or the achievements obtained become the "purpose."  Probably every person has some "purpose" or goal in life, but not everyone would have a "standard" of life.

  Pete was born very poor.  This poverty made such an impact on him in his childhood that he now strives to become wealthy.  He obtains his accumulating wealth by whatever means necessary.  Although Pete definitely has a goal or purpose in life (becoming rich), he does not have any standards.  There is little doubt among those who know Pete that he will become very rich.  Along the way, however, Pete is not finding much happiness.  He has not thought out the goals he has established.  Pete knows what he is doing, but he does not understand why he is doing it.  Pete would be surprised (and perhaps even laugh) if someone told him that ethics are a part of finding happiness.

How Can One Be Ethically Active? 

  Our history is full of wise men who wrote about the philosophies of life.  While many of them did not agree on many points, most did agree on one:  lack of ethics promotes disorganization, financial turmoil and, sometimes even the demise of governments.

  As individuals, we may often feel that we have little control over others.  This is true to a certain extent, but we do actually have more control than we might realize.  The control we have is the ability to choose our own way of life.  There is little doubt that what we do on a day-in, day-out basis affects everyone we come in contact with.  We are also impacted by others in the same manner.

  Tim is driving to work and the traffic is very congested.  Even so, his mood is bright and he is humming along with the radio.  As he merges into another lane in anticipation of an upcoming freeway exit, the man he pulls in front of becomes angry.  Perhaps he feels Tim has cut him off, or maybe he is just a sour person in general.  For whatever reason, the driver is angry.  The other driver whips alongside of Tim's car, rolls his window down and shouts angrily.  The angry driver also gives Tim a few well known hand signals.

  Although Tim did not feel that he had done anything wrong, his mood instantly changes.  He no longer hums with the radio.  When he arrives at work, his secretary greets him cheerfully.  Tim's response is short and bleak.  Although he did not actually say anything bad to Jane, his secretary, she felt that he must be angry with her for some reason.  Had she forgotten to do something yesterday?  Jane spent her morning feeling worried and stressed.

  By the afternoon, Tim had forgotten about the driving incident (or simply put it behind him), but Jane was still affected.  As the day progressed, she expected some explanation from Tim about what she had done that was upsetting to him.  When no explanation came, her stress mounted.  That evening on her way home, Jane began to wonder if Tim was simply unhappy with her work in general.  That night she barely slept.

  On her way to work the next morning, Jane stopped to get her car filled with gas.  When she handed the clerk a twenty dollar bill, the clerk miscounted her change.  When Jane noticed she was short a dollar, she curtly pointed out the error to the clerk.

  After Jane left, the clerk, Susan, felt humiliated.  It was obvious to her that Jane thought she was trying to cheat her by keeping an extra dollar.  Susan never became angry, but she did feel stupid and inferior.  It was just one more incident that confirmed to Susan that she would never amount to much.  She figured she would probably always work for minimum wage because she simply did not have the ability to do any better.

  Are the examples of how we affect others an extension of our code of ethics?  Often we forget that ethical behavior is not only connected to such things as paying our taxes fairly, following the laws, or telling the truth.  Ethical behavior can also be connected to how we treat others.  Ethics is a code of values to guide man's choices and actions.  In choosing one's own actions and even goals, we must face constant alternatives.  Even such things as the manner in which we speak to others are a part of our daily alternatives.

  Some have argued than man's nature is to be selfish.  In order for a person to choose various alternatives on a daily basis, he or she must have a standard of values.  The term "value" presupposes an answer to the question: of value to whom or for what?  This is where an inborn selfishness might be considered.  What is the end goal or purpose?  Who is the perceived or intended beneficiary of the action?  Ourselves or others?

  To be selfish is to be motivated by one's own self-interests.  Insurance agents are often accused of this.  For an individual to center on their own self-interests, they must have considered what constitutes their own self-interests and how to achieve it.  Because a selfish person chooses his goals by the guidance of reason, it is hard to believe that selfishness is an accident (or a lack of training in the case of insurance salespeople).

  It should be noted that Ethics is hard work.  Who among us would not enjoy an extra $5 (even if it were not due us)?  If our boss thought we were the one who did something wonderful, who would not like to take that credit, even if it belonged to someone else?  Being ethical can be very difficult when being unethical is sometimes more rewarding from a financial or public standpoint.  The public standpoint is often overlooked.  If we feel strongly about something that no one else seems to, it is very easy to keep quiet.  In fact, that is precisely what gets "followers" in trouble.  When a person knows something is not right, but no one else is saying anything, it is easy for the individual to simply go along with the group.

  Greg works for a very large insurance agency.  Greg has always had very strong religious convictions and, as a young man, took much teasing from others regarding his so-called "prudish" outlook.  Over the years Greg simply found that keeping quiet was easier.  After all, he reasoned, as long as he personally held his moral ground, what others did was their own business.

  Mike was also an agent with the same agency as Greg.  As time went by Greg found mounting evidence that Mike was "clean sheeting" his applications.  One day in the field Greg ran across one of Mike's clients.  She was an elderly woman who obviously had some mental disorder.  She could not remember simple things and was under a doctor's care.

  Back at the office, Greg asked Mike how he ever got her on that policy, which was issued only 6 months previously.  "I would not have even attempted it, given her medical situation" stated Greg.

  Mike replied "I simply stated what she told me.  If she didn't say it, I didn't write it."

  On two other occasions, Greg found similar circumstances in Mike's business.  Greg voiced his concern to Mike:  "You know those people won't be covered if something comes up.  The company will simply rescind their policy."

  Mike:  "You worry too much."

  It became obvious to Greg that Mike did not intend to change his practices.

  Since Greg is not involved and is behaving in a way that he perceives to be ethical personally, does he have any moral obligation to the clients of Mike?  Since Greg considers Mike to be a friend, does he have more obligation towards Mike or Mike's clients?

  Greg was still concerned so he went to his manager.  The company's manager told Greg that it was not his concern as did several other coworkers.  In fact, most people that he talked to within the company seemed to be viewing Greg as a potential trouble maker.  Greg had heard about "whistle-blowers" and he knew he could be putting himself in a precarious position with the company if he became too vocal.

  Are Greg's self-interests more important when no one really seems to care other than himself (and the issuing insurance company)?  Is it the management's responsibility, rather than Greg's, to mandate ethics?

  On the surface it would be easy to say that Right is Right no matter what.   It is likely that most people would, however, suggest a different course for others than they would suggest for themselves.  Studies have shown that people are more likely to voice ethical behavior than follow it.

  The truth is, our identity is established by our actions (a liar is known for his lies; a thief is known for his stealing).  A common pitfall to proclaiming ethics, but not following them, is that an identity is established.  In addition, if someone intends to declare ethical conduct, they need to be following it themselves.  Otherwise, their verbal spouting will bring them more trouble than joy.  Those who follow what they declare will find respect from others, but those who declare without any following actions will find themselves viewed with contempt.

  Who we become is a gradual thing.  Seldom are we formed by one single experience although one single experience, if great enough, can change our direction or focus in life.  Our "becoming" is a gradual and natural thing.  So gradual that people seldom notice what is happening themselves.  Without even noticing it, one can slip into a pattern of behavior which ends up being the ultimate basis by which we are judged by others.  Therefore, a code of ethics must be a daily goal that we deliberately choose to follow.

  In Arthur Miller's famous play, Death of a Salesman, the main character, Willie Loman, believes that the secret of success lies in the salesman's personality.  This might involve many aspects of the personality, but it comes down to acting whatever way will get the sale.  Being the person the prospective buyer wants the salesman to be.  If the buyer loves children, then the salesman loves children; if the buyer would like to travel, then the salesman either has traveled or wants to travel also.  Common ground, we are told, is vital to the sale.

  Being an actor or an actress, especially in sales, is a dangerous part to play.  Sooner or later, it is likely that the salesperson's true identity will be exposed.  The woman who tells the elderly client that she loves cats, too, will be caught smacking at the cat who attempts to climb on her lap.  The man who weaves a tall tell about his traveling experiences will say something that proves him to be a liar.  Sooner or later, chances are that we will blow our cover.  It is simply too difficult to keep what was told to who straight.  This is especially true in small towns where your clients often know each other and will compare notes.  Attempts to conceal our true nature will eventually become recognized.  As the Bible says, sooner or later who we are "will be declared from the rooftops."

  It should be pointed out that it is possible to discontinue acting in an unethical manner, or "mend our ways" as it is often referred to.  It is never too late to begin to act in an ethical way.  In fact, John Newton, the man who wrote one of our most famous songs, was the captain of a slave ship.  As he came to realize that slavery was wrong, he used his experiences to bring this same understanding to many others.  The song written by John Newton was Amazing Grace.  Knowing this, the words of the song gain a greater meaning:

Amazing grace, how sweet the sound

that saved a wretch like me

I once was lost

but now I'm found

was blind, but now I see.

  Of course, the most important reason to be ethical is not hard to understand.  We are a reflection of our lives, our families, our community and of ourselves.  Our children will copy us (that's hard to believe during their teen-age years, but it does happen), our families and our communities will be affected by our actions and we, ourselves, must live with who we are yesterday, today and tomorrow.  In fact, those around us, including our coworkers, are affected by our values (ethics).  Just as a follower may follow the cheater, they may also follow ethical behavior.  When you define the "inner" character as someone you are proud of, it will show in your daily behavior which includes your work.  This will bring self-assurance which will ultimately benefit you in many ways, including financially.  Personal integrity radiates confidence and everyone prefers to deal with people who seem confident.

  We are often told that merely feeling very good about ourselves will accomplish much in the sales field.  There is certainly much truth to the concept that self-worth is tied in to many of our successes in life.  In fact, low self-esteem may be tied to many of the underachievers in our country.  However, high self-esteem in itself will not accomplish anything.  It takes much more than that.  Some of the most effective workers in the world are the Japanese people.  Yet personality tests have revealed that the Japanese people traditionally have very low self-images.  They are often depressed because they do not feel good about themselves.  Self-esteem is important to have for many reasons, but it is not likely to ensure economic success.

  It has become commonplace for insurance companies and other industries to shower their salespeople with prizes, plaques and medals for selling their products.  It seems that companies believe their employees will work only for material gratification.  There are those who believe that attempts to build self-esteem in the work place will result in successful (financial) payoffs for the company.

  Sometimes this belief can cause problems.  Employees may begin to do their work for the wrong reasons.  Their "ethical compass" may become misdirected.  When self-esteem is tied to financial rewards, the why of the work can again become lost.  Of course, financial rewards are essential, but when ethical behavior is not tied into those financial rewards, many negative circumstances can develop.

  Few, if any, jobs are totally satisfying.  Certainly, it is desirable to find fulfilling work, but most things in life are a mixture of things.  In other words, there are times that the job seems extremely fulfilling and there are other times when the job seems absolutely terrible.  Even fields of work that seem to be glamorous to others generally carry with them a certain number of negatives.  Even jobs that promise excitement carry stretches of boring mundane tasks.

  Promotional advertising is all around us.  As viewers of this, we must be aware that glamour and excitement also carries simple hard work and frustration.  Look at the ads for joining the armed forces.  These ads show handsome men flying planes or jets, standing on the decks of mighty ships, or visiting exotic foreign places.  They do not show kitchen duty, strenuous marches, or other mundane tasks.

Laws and Ethics

  There is no doubt that we could not have any type of social order without obedience and respect for authority.  Some philosophers actually argue that social order is so important; we should blindly follow authority in order to protect society.  Few of us in the real world would agree with this opinion.  Even so, imagine what would happen if massive amounts of people disregarded our laws.  We only have to look to the Los Angeles riots to understand the outcome of such actions.  Regardless of the motive, the results are nearly always negative for everyone.

  On a more moderate scale, simply consider the results if sizable numbers of people disregarded stop lights while driving.  While that is not a violent action, the results could actually end up violent through deaths from accidents.

  All of us would probably agree that order and authority are necessary in our lives.  Even your business could not run without a measure of order and authority within it.  Even so, there are times, as the My Lai massacre in Vietnam showed, when authority must be questioned.  It is important to question decisions or directives that do not follow your ethical guidelines.  You must also take responsibility for the directives if you choose to follow them.

  Stanley Milgram demonstrated how difficult it is for most people to defy authority.  His subjects were ordinary people who answered an advertisement.  Each subject was informed that the purpose of the experiment was to study the effects of punishment on learning.  Of course, the real experiment was to study the extent to which the subjects would obey someone in authority when they were told to inflict pain (through electric shocks) on a person who was not threatening or hurting them.

  Actually, the person who was supposedly being shocked was an actor.  No shocks were actually being received.  However, the subjects in the experiment did not know that. 

  The subjects were told to teach another (the actor) a list of word pairs.  They were told the other subject (the actor) was an accountant.  The actor appeared very mild and passive.  Each time the accountant (actually the actor) made a mistake, they were to shock him by pulling a lever on an impressive-looking shock generator.  In addition, the shocks were to be increased in intensity each time a mistake was made.

  At the first shock the actor merely grunted, but as the shocks supposedly increased in their intensity, his reactions ranged from complaints of pain to outright screaming.  The subjects delivering the shocks experienced sweating, trembling, laughing nervously and digging into themselves with their fingernails due to stress.  Often they looked to the researcher for permission to stop.  Each time the researcher would instruct them to continue in an authoritative voice.

  Despite multiple signs of stress, despite their desperate desire to stop, despite the screams of the actor, despite the fact that the subjects were never forced to continue to upgrade the level of the shocks, 65 percent of the subjects did continue to deliver shocks to the actor actually reaching the highest level of intensity on the shock generating machine.  This experiment pointed out that the majority of people will not defy authority even when they desire to do so.  When questioned later, a common response was "I was just doing what I was told."

  Ethics will always be a complex issue.  Only by setting down personal morals will individuals be able to determine their own personal course in life.  While doing so is not always easy, it is the most rewarding.

United Insurance Educators, Inc.

PO Box 1030

Eatonville, WA 98328

(800) 735-1155