Financial advisors’ perceptions of ethical and effective attitudes and behaviour in their profession

Abstract

Unethical behaviour is a concern in the workplace, because of the possible consequences for all stakeholders. This issue is particularly salient in the financial services sector, a highly regulated environment, where breaches of the regulations can result in large fines and reputational damage to the organisation concerned. Unethical behaviour can also have severe effects on customers, such as when inappropriate advice leads to customers losing all or a large part of their savings. Empirical studies have tended to focus mostly on organisational antecedents of unethical intentions and behaviour, with individual factors not being given that much attention. Research on the antecedents of unethical intentions and behaviour has produced inconsistent findings, suggesting that context might play a role. Consequently, my research has attempted to study the individual antecedents of unethical intentions and behaviour in the financial services industry, a specific context where it is salient. Malta presents a particularly pertinent context for this study, as its profile on Hofstede’s cultural dimensions scale has been empirically linked to a higher potential for engaging in unethical behaviour. A related issue involves effectiveness in this sector. Workplace effectiveness is usually defined in terms of competencies, but there seems to be little research into the specific competencies required from effective financial advisors. Research has also failed to examine the interaction between ethical and effective intentions and behaviour – which ethical behaviours also have a positive effect on effectiveness, and which do not? This research programme is the first to examine these interactions and their consequences for stakeholders. In an initial exploratory qualitative study, discussions were held with five top officials from a local bank in order to understand how they applied goal-setting in their organisation, since this motivational technique has been linked to the possibility of employees engaging in unethical behaviour. These discussions provided some insight into how the processes applied could lead to unethical behaviour, but also indicated that the reasons behind advisors engaging in unethical behaviour are much more complex. A hybrid mixed methods design was therefore used for the main study. The first phase consisted of 20 repertory grid interviews with financial advisors. Qualitative analysis of the data from this study resulted in a category table consisting of 153 unique constructs, which were classified into 23 categories and 4 superordinate categories. These data were subsequently used to create an overall grid which was analysed quantitatively. Quantitative analysis demonstrated that both ethical –unethical and effective – ineffective attitudes and behaviours were not necessarily at opposite ends of a continuum, and while some attitudes and behaviours distinguished significantly between exemplars of advisors, others did not. These results were used to construct a questionnaire for the next phase of the study. Seventy six financial advisors completed the questionnaire, and results indicated which attitudes and behaviours could distinguish between the four exemplars of advisor, as well as those which were characteristic of two or more exemplars. The results of this study programme can be used to design specific procedures for recruiting, appraising, and training ethical and effective financial advisors.