Podcast Transcript

Episode 63, Season 1

Ethical lens – the latest trends on ethics and trust, with Clare Payne

 

Intro: 00:00 This episode was recorded live at United, the 2019 AFA Conference in Adelaide. The Association of Financial Advisers is the association of choice for financial advice professionals, and empowers them to transform the lives of Australians through quality financial advice. For more information, check out afa.asn.au.

Fraser Jack: 00:19 Welcome to The Goals Based Advice Podcast where our conversation’s with pioneers of the new world of financial advice. I’m your host, Fraser Jack. I want to thank you so much for tuning in today.

Coming to you live from the Association of Financial Advisers Conference here in the beautiful city of Adelaide who really turned on a nice day for us here today. It’s day two and I’m sitting with Clare Payne who has just come off stage giving a presentation around ethics. Welcome, Clare.

Clare Payne: 00:47 Thank you having me.

Fraser Jack: 00:49 Now, do you want to give the listeners a quick overview of what you’re doing at the moment?

Clare Payne: 00:53 Yeah, so I work in the field of ethics. I’m actually a lawyer by background, but I’ve been working in ethics in banking and finance. For awhile I held a role in an investment bank looking at an integrity office, and then I really started focusing on the individual. So I wrote a book called A Matter of Trust: The Practice of Ethics in Finance with Professor Paul Kofman who was my coauthor, and we really focused in on what are the individual things, individual practices that people can do to contribute to an ethical society, an ethical finance sector and ethical advice sector.

Fraser Jack: 01:32 Now, you’ve been doing this for a while and it’s one of those things that’s really come now to the attention with all of the events that have happened recently and the legislations that are coming in. How are you seeing the growth in the sector?

Clare Payne: 01:44 Yeah, so I think ethics is really one of the big topical issues of the day and it’s not just sort of distinct to Australia, it’s a global trend. Just earlier in the week we had 200 business leaders of the world’s biggest businesses come out with a really a report and a statement around the purpose of business being about more than just making money. So this is sort of a global trend around other responsibility of business, the global issues we’re facing in society around climate change and inequality. They all are relate to all our work and they do relate to the advice sector as well because obviously we deal with financial products that go across investment in a lot of different sectors. And so, these big sort of global issues, big issues around trust, relate to the advice sector a lot. So I think the rise of ethics is sort of not distinct to this area, although there are particular cases that have really put the spotlight on, but I don’t think the spotlight’s going to go away. I think it’s a permanent fixture.

Fraser Jack: 02:54 Yeah, absolutely. Now, who are you mostly working with?

Clare Payne: 02:57 Well, I tend to like working with associations because, I mean, maybe my background as a lawyer, I’m quite into the concept of a profession and professional standards. And the thing that’s interesting about a profession and what makes it distinct from just having a job is the idea that with a profession you have a concept of the public interest, that you are serving a public interest above yourself. And the other idea around a profession is that there are ethical standards at the core that you all understand and work to and are held to. So that’s maybe why I’m sort of drawn to working with associations such as the AFA.

I also work with chartered accountants and I have a role at EY as a fellow for trust in ethics. So I tend to still look broadly and I also enjoy teaching at university and designing courses for students who I actually find really good to work with and I feel a lot of sort of hope actually in young people. We’ve been incorporating ethics into undergraduate degrees for a while now and I find those conversations really rich with the students, sometimes richer than they are with board rooms.

Fraser Jack: 04:10 Yeah, fair enough. Now, you’re here at the conference, you’ve just come off stage. Do you want to give us an overview of your presentation and what the main takeaway points were?

Clare Payne: 04:19 Yeah, so in my presentation it was really sort of looking practically about what ethics is and really talking about the ethical goalposts of society and how they do shift. So how we are changing our mind about what’s acceptable, and we all have to be sort of cognizant of that and tracking, “Well, where are things shifting and is what I’m doing reasonable or would it be considered right?” I also talk about ethical leadership so that ... We can each be ethical leaders. It’s really about our own individual practices. And what I found at the moment, particularly after the Royal Commission is a lot of people talk about trust and the loss of trust, and I like to kind of turn that around and really look, again, back to the individual, what does it mean to be trustworthy? Because that’s really the thing we can control. I can’t make you trust me but if I behave in a trustworthy way, you might be more likely to and I’m probably going to behave more ethically.

So I talk about three factors that I think make up trustworthy behavior and it relates to advisers is, do you have the right skills to deliver on what you’re promising? Do you have integrity? Is what you’re saying will happen what will happen? Do your actions match your words. And then the third factor I think about and focus on is care. Do you care? Have you put yourself in the other person’s shoes? And what we saw during the Royal commission is often that of those three components, often it was care that people weren’t focusing on. They weren’t really putting themself in someone else’s shoes necessarily, in the cases that they talked about in the Royal Commission, to really think about the impact on the other person.

So I think when we flick it around to say, “Well, let’s think about how we behave in a trustworthy manner,” that really puts the power back with the individual because we can’t just sort of chase trust. It has to be the outcome of good behaviors.

Fraser Jack: 06:18 And so, there’s things being put in place right now like code monitoring bodies and obviously there’s a lot of the rules and regulations and the exams and the CPD points, et cetera. How do you see this panning out?

Clare Payne: 06:30 Yeah, well obviously there’s still a lot to sort of settle in terms of what the ethical standards are and how they actually apply. Really the sort of nitty gritty detail has to be mapped out and I know there’s still contention around certain issues. And it is not easy because you’re dealing with a broad sector, broad amount of skills, different levels of experience and trying to create cohesion. It can be hard. When you compare it to, for example, accounting, which has been a profession, they’ve sort of got the benefit of years and years of designing their standards and giving guidance on what those means. So I think there still is a long way to go and there are obviously issues that still need to be discussed and determined, but I suppose we’re on the path to professionalization in terms of becoming a true profession.

Fraser Jack: 07:24 Yeah, and I like what you said about the ethical goalposts moving and shifting. So I guess that path is never ending?

Clare Payne: 07:29 Yeah, exactly. I mean, I don’t think you ever sit back and go, “Well ethics, tick.” Maybe if you want to get your ethics training points. But no, I think it’s in motion. It’s literally happening all the time and the standards and what’s acceptable and what the public interest ... It does shift too. And this is why professions always have ethics training, because it is a constant and we have to be constantly adapting.

Fraser Jack: 07:56 Yeah, so a lot of work to be done in a short space of time with regards to the ethical standards and like you said, getting everybody across the line and ticking the boxes and making sure where everyone’s at least at that level before we move forward. How long do you think this is going to take to get the industry up to that level?

Clare Payne: 08:13 Well, I mean, I’m sure people would say that they already are working to these levels and they’re ... That’s probably very true for a lot of practitioners that they feel they already are at that standard. For others, it might be harder, particularly in relation to university qualifications, particularly if they’re later in their career and have been working for a long time. It might seem like a really arduous requirement. So I think it’s probably be very varied experience for people to go through this process. But I think on the whole, we will get to a better place, but it’s certainly not easy for everyone and it’s not going to go unchallenged either and we’re seeing that.

So I’ve been really conscious that I’m speaking at this conference today and running a workshop and just to keep on top of the issues as they’re discussed. I mean, it’s almost daily that people are talking about quite a big issue for financial advisers. So it is very current, very alive and it just shows actually there’s still a lot to be worked out in terms of how this actually rolls out and whether the ... I suppose some people feel like the timeframes are not fair and if they’re not going to be easily met or possible to meet them, then we’re going to have to work that out.

Fraser Jack: 09:37 Yeah, I was just having this conversation around timeframes and being a fairly good thing just to create action to happen, and if you get to the end of the timeframe and there’s still a bit of work to do, then that’s when you can talk about the length of the timeframe being extended, but not necessarily right now.

Clare Payne: 09:54 Yeah. And I think time frames, like you said, yeah, you do need them, they get you moving, they indicate a priority, and that’s what’s happened. It’s like, “Well, this is serious. These are timeframes.” And those pressures have come from more than just a regulator. There’s sort of a society we want to feel that we can trust and there’s going to be a better standard, and timeframes are part of that. So I think we have to remember that, that actually this responds to part of the community concern. And so, therefore we should do everything we can to respect the timeframes if we can.

Fraser Jack: 10:30 Yep. So let’s fast forward maybe five, six years. How do you see it all panning out?

Clare Payne: 10:34 Well, gosh, in five or six years, I would love it if more people were getting financial advice and I suppose that’s one of the big risks of these changes is the really bad outcome. The worst outcome would be that less people get financial advice. Because we know that financial literacy is a problem in Australia. We have compulsory superannuation systems, so people are forced into financial instruments, financial products, with very little understanding of them. So I’m really kind of concerned that some of these issues could possibly lead to less people getting advice on it, but I really hope that actually if we work together, particularly the associations, that the broader goal is actually we want more people to get good advice.

Fraser Jack: 11:18 Fantastic. Thank you, Clare. We’re getting the wind up music. You’ve actually got to go and run a workshop immediately. You only had a few minutes to give me so that’s amazing. Thank you so much for coming on the show. Really appreciate it.

Clare Payne: 11:27 Thank you for having me.

Fraser Jack: 11:28 If you haven’t already, I’d love you to subscribe to the podcast on your podcast platform of choice. To continue the conversation head over to our social media channels. We’ll catch it next time.

 

 

 

Disclaimer: This document is a transcription obtained through a third party. There is no claim to accuracy on the content provided in this document, and divergence from the audio file are to be expected. As a transcription, this is not a legal document in itself, and should not be considered binding to advice intelligence, but merely a convenience for reference.