Episode 1: Financial Ethics, the Performance Enhancer
SYNOPSIS OF THIS FINANCIAL ETHICS VIDEO (but watching the show is probably more gripping)
All professions are guided by their specific purposes. Invariably, the purpose of most professions is to help people: the purpose of medicine is to help people to be healthy; the purpose of law is to help people get justice and the purpose of teaching is to help people learn. Similarly, finance, if it is to remain a profession, has a purpose. The purpose of finance is to help people save, manage, and raise money. The service element of any profession makes those in the profession think twice before making the choice of self-enrichment at the expense of the people he is supposed help. Having a service oriented purpose for finance is paramount if we wish to instill an ethical culture in any financial institution.
Financial ethics is a performance enhancer because it improves and adds to financial skills. One important skill financial ethics gives is the ability to issue spot. What are the possible ethical issues that may arise if this financial product is sold indiscriminately (think Collateralized Debt Obligations i.e.CDOs and sub-prime mortgages)? How can the institution and its clients be harmed? These types of questions require analytical skills to answer, as much as any technical financial problem. So financial ethics is not merely cosmetic but a practice that imparts skills, which boost the performance of any financial professional.