Term and Universal Life & Ethics

Chapter 5

Ethics

Making Choices

  Why would anyone choose not to be ethical?  Doesn’t everyone want to be ethical?  It seems a logical course of action.

  It does, in fact, seem doubtful that any person would purposefully decide to be unethical.  However, each person makes choices about their activities on a daily basis.  Such choices make individual decisions for or against ethical conduct.  Most people probably feel they are ethical even if a lie just passed through their lips.  Perhaps our denial of the consequences of our actions is a way of justifying ourselves.  “I lied because it was necessary.”  “I took that from my employer because I was entitled to it.”  And so forth.

  Many people do not make a deliberate choice one way or the other and that, sadly, is often the problem.  By not purposely making a choice to be ethical, they allow themselves to be moved by whatever force currently surrounds them.  There was a song with the words “You’ve got to stand for something or you’ll fall for anything.”  In many ways, this is true.  A person who has considered what is ethical and right for them will be prepared when a questionable situation arises.  Of course, anyone can be taken by surprise occasionally, but without any ethical evaluations at all, nearly every situation will be one of surprise.

  Although we routinely hear individuals say they did not realize they were making a wrong (unethical) choice, the fact is, most of us do know right from wrong.  We know it is wrong to accept something that is not ours; we know when we are speaking incorrectly; we know when we should feel guilty about our actions.  Therefore, every day we do make choices about whether or not to be an ethical person; we just do not label it as such.

  Every person needs to have a sound moral base from which they operate. This is especially necessary in some industries, such as insurance and financial planning.  Of course, we would like to have all industries considered ethical.  Wouldn’t it be nice to know that the car repairman would always be ethical?  Certainly, we need ethical attorneys and if we want to really stretch our imaginations, just think if our politicians could be counted on to be ethical!

  It is a sad fact that we have actually come to regard (and accept) some industries as perpetually unethical.  Many industries have fought hard to change these perceptions by the public; others do not seem to care as long as they can continue living and working as they wish to.  Law enforcement agencies have had an especially hard time with public perception over the last thirty years.  Larger departments now hire public relations personnel just to deal with public perception.

  Why is it important to be perceived as ethical?  For some types of professions, it is financial.  When police and sheriff departments are perceived to be unethical, lawsuits often follow.  Citizens who feel they have been wronged sue for mental and physical damages and they often win large monetary judgments.  Some types of industry and service organizations routinely settle out of court to keep such things out of the public eye.  Of course, the few representatives that have built this bad public image hurt all the agencies that do a good job.  This is true of any industry, but especially those such as insurance, because there is a public concern.

  Since the insurance industry works with consumer finances, it also carries a great deal of personal liability for those who sell the products.  This is seldom discussed at agencies, but it should be.  Attorneys complete their CE in such topics as suing insurance agents and their contracted companies.

Ethics go beyond Philosophers

  It is actually unfortunate that the topic of ethics so often is put in the context of philosophers and philosophy.  While it is true that they were the first to really study the need for moral behavior (another way of saying ethics), the topic itself is for the common man.  For it is the common man (and woman) that lives it on a day-to-day basis. 

  Practicing fundamental ethics is really nothing more than following rules that are functional, showing respect for other people, respecting the rights of other people, virtues, and giving justice to all people equally.  Of course, each of these elements is not always simple, but the rules of ethics that apply to them are.  In simple terms, what is right for one person is right for all people.  As we know, while this sounds very simple, it is most difficult to carry out.

  Our justice system is an excellent example of the difficulty in delivering equal justice.  Even though it was set up with that in mind, the delivery depends upon the expertise of the people involved.  If the attorney representing one side is considerably better than the attorney representing the other side, justice may not be delivered equally.  The fault does not necessarily lie in the system itself, but rather in those delivering the justice.  The most well-meaning, ethical person may not be able to deliver equal justice to all.  There are simply too many players (people) involved.

Being Ethically Responsible

  “It’s not my fault.”  “Someone should have told me.”  “No one helped me when I needed it.”  “No one explained that to me.”  “I didn’t know any better.”  “If he/she had done what they were supposed to, it wouldn’t have happened.”

  The excuse really does not matter.  The fact that an excuse exists at all is the point.  Our society began allowing the transference of responsibility about twenty or thirty years ago.  Some professions seem to thrive on the theory that no one is responsible for anything they do.  Initially the desire was to help those who really needed the help.  There were certainly situations where people were punished for deeds they could not help.  Unfortunately, somewhere along the way our society began to believe that no one was responsible; we allowed everyone to offer excuses to shift their blame.  Whether the blame goes to our childhood, our friends, or our parents, every bad thing we do experiences the shifting of blame.  The old adage “The buck stops here” seems to have become lost.

  No person can be ethical if they do not also accept responsibility for their decisions.  Each person has free choice.  They can go left or right.  They can continue on or stop and sit down.  Every thought and every move is a personal choice.  Yes, there will be mitigating factors involved, but there is still free choice.  The only thing in our lives that does not involve choice is where we are born and who our parents and family are.  Past that, once we are adults, it is all up to us.

  It is true that some people seem to have life stacked against them.  Some people are born poor and experience fewer chances for improvement or exposure to education.  Some people have parents who give little or no love to them as children.  Some children lose their parents entirely, living in foster homes that may not give love.  Some people experience terrible physical or mental handicaps.  Accidents and illness may take those we love from us.  All of these things can happen but that still does not remove free choice from our lives.

  There are hundreds of examples of people who have made moral decisions despite poverty, lack of education, lack of families who love them and despite physical, mental and emotional problems.  Most of us do not have any great hurtles to leap; we must merely take responsibility for our own lives and our own decisions.

Caring for Others

  The common thread among the most loving, responsible people is a concern for others.  These people made the conscience choice to be giving, loving, and moral.  Such people recognize the need for honesty in their lives and have chosen to make moral decisions in personal and business relationships.  As the individual states began requiring education in ethics, those who have already chosen this path will accept it as part of their professional requirements.  Others may feel differently as they are forced by law to review their business practices.

Why would someone decide to simply do the right things without pressure from law or the community?  Why would a person pass by monetary rewards in favor of doing what they perceive to be right? Why would an individual think of another above himself or herself?

  There are as many answers as there are people.  For some, they are simply happier when morality is part of their lives.  They experience a deeper sense of worth by giving than they do by receiving. In fact, it is common for those who give to say they receive more in their gifts to others than they do when they themselves are the recipients.  What they receive is an inner peace, an inner satisfaction that feeds them mentally and emotionally.

  For others it is a simple sense of duty.  A feeling of responsibility to some entity, whether it happens to be their country, spouse, children, or even themselves.  These people are motivated by some internal need to produce something positive in some way.  Those with this sense of duty often experience a driving desire to meet specific goals.  Their personal code of conduct includes following specific rules for their own lives.

  Religion undoubtedly plays a part in the lives of many ethical people.  They have a strong belief in their own personal God.  Part of this belief involves doing what is right, not only for themselves, but also for others.  Mainstream religions are based on ethical or moral attitudes.  The Ten Commandments, or similar teachings, are generally the basis of what is considered right and wrong.  For those with a strong religious belief, nothing less than personal responsibility would be acceptable.  Moral people never incorporate hate, violence, or aggression into their religious beliefs, although individuals may use religious beliefs as the stated excuse for immoral actions.

  For many, love of others is the motivating force.  Parents want their children to grow up happy and successful.  Children want their parents to be proud of them.  Husbands and wives want to demonstrate their love for each other.

  These are not the only reasons that a person chooses to be ethical, but they are perhaps the most common.  It should be noted that the term “ethical” may be replaced by words such as moral, character, or principled.  Politicians love such words when they make speeches, but the actual situation only exists when actions demonstrate a true belief in performance.

  It is easy to “talk-the-talk,” as they say, but to be actually ethical, they must also “walk-the-walk.”  In other words, talking ethics and actually being ethical is not necessarily the same thing; only actions equate into ethics.

Corporations also display ethical conduct or the lack thereof; greed, environmental issues, and misconduct are not limited to individuals.  It should be noted, however, that corporations are entities, not people.  When corporations are accused of misconduct or unethical behavior, it is really a reflection of those in charge of the company.  Since the employees are most likely following corporate policy, it is further likely that it is the individuals at the top making ethical decisions that affect company policy.

  The topic of ethics is often in the news as companies come under scrutiny. Americans want ethical representatives in Congress, consumers want ethical repairmen and financial planners.  Who would want any representation of any kind to be unethical?  Does this recent focus on ethics promote the behavior?  Only time will tell, but it does seem likely that this focus will eliminate many of the excuses that have been used for unethical behavior.  The “I didn’t know” defense will not work when ethical education has been mandated.

  Simply desiring ethical conduct is not enough, although it is certainly a necessary first step.  Most courses do seem to stay with philosophical views, but this course will be deviating from the normal approach.  That is not to say that some philosophy will not be in it; how can one talk about ethics without also talking some measure of philosophy?  However, we will strive to deal with ethical conduct in a modern format.

  Is it possible to teach ethics?  A thief may want to steal even though he has been shown that it is not legal or ethical.  His decision to steal or not steal is likely swayed by understanding what will happen if he is caught.  If he no longer steals it is more likely that he is aware of the consequences, not necessarily because he has lost the desire.  He may now fear going to jail.  In this respect, the thief was taught not to steal.  We haven’t changed how he thinks, but we have changed his actions through education.

  Agents have been accused, often unfairly, of taking advantage of those they sell their products to.  Such accusations are sometimes the result of differing opinions.  Make no mistake that those who are against insurance are for something else.  While agents may feel unfairly treated such differing opinions are actually beneficial for all since it brings people together sharing personal views and opinions.  Economists know that insurance is beneficial.  In fact, insurance policies are responsible for preventing financial loss to thousands of people.  Many types of industries could not exist without insurance. 

  It is important for agents to know how their products benefit society.  Who would want to represent an industry that was not beneficial in some way?  Most agents believe in the products they sell and strive to represent them ethically and correctly.  Certainly, one must always follow state and federal law, but agents must also understand how their products fit and whom they benefit.  Prelicensing education covers laws and agents are required to stay informed on new laws and how they impact insurance requirements. 

  Many ethical requirements are also legal requirements.  We know it is not ethical to use premium collected for personal use.  It is also illegal to do so.  We know that agents must clearly state who they are and the company they represent when presenting their insurance products; this is both an ethical and a legal requirement.  Many laws deal with ethical issues.  When an ethical path is not routinely followed by choice, it becomes law to force compliance.  The few who failed to act ethically now make it a legal requirement.  For those who already made the ethical choice the new law does not affect them, though it may cause some additional hoops they must jump through.  For those who had not made the ethical choice, the new law now becomes a way for the state to punish or remove those who fail to follow the requirement.  Most laws are passed as a means of removing those who fail to behave as they ethically should.

A Legal Liability

  Agents may fail to recognize the legal liability they face.  Even good agents can be sued for their errors or lack of judgment.  Those who routinely follow an ethical path will be less likely to end up in court, but agents should realize that a lawsuit is not always an indication of unethical behavior.  It may mean that their client is unhappy with the product they sold; it may mean the client’s family did not understand the product their relative (usually a parent) purchased.  It may simply be disagreement about the product and the benefit it may or may not have accomplished.  Most lawsuits relate to money – the loss of it either through an investment or simply the premiums that were paid.  Agents cannot control the rise and fall of investment income, but they can provide full disclosure so that clients make their own choices based on sound information.

Ethics on the Job

  From the time our children are small, we try to teach them a work ethic.  A work ethic is the desire to produce or create something positive.  A work ethic involves more than simply showing up every day, giving eight hours of time, and collecting a paycheck.  A work ethic is the desire to produce.

  As members of the human race, each of us faces ethical or moral issues daily.  Most are relatively small (should I tell my boss what I really think of her dress?), but some will be large and significant (if I don’t tell the financial rating, he will probably buy this).  Everyone faces decisions of honesty, but most lines of work do not affect consumers to the extent that the insurance industry potentially can.  Insurance agents deal with the public trust and certainly their futures.  Every insurance and annuity contract has the option of changing the future for those involved.  A policy that is poorly fitted to the client can cause severe financial difficulty in the future.  Besides the wasted premium spent on a poor product, if it does not perform as expected the lack of protection can cost the insured thousands of dollars in lost security.

  Some types of ethical decisions have no clear-cut lines, while others do.  Some have clear-cut lines because of laws or state regulations.  Some decisions are individual opinion.  Where there are no clear state or federal regulations, consumers depend upon their agents to be ethical and trained enabling them to offer solutions or suggest products that will meet the client’s needs.

Education Requirements

  Most states now require agents to obtain some amount of continuing education credit hours.  These are referred to as CE hours (CE standing for continuing education).  Most agents understand the reasons for this and agree with the concept.  While it is true that experience is a valuable teacher, the insurance industry experiences constant legislative changes.  Education will highlight many of those changes.  It also offers the opportunity to broaden one’s knowledge, which is beneficial to agents and clients alike.  Only those agents who care enough about their own responsibility and reputation will be prepared through education.

  Most consumers want those they deal with to be educated on a continual basis.  We expect the man who repairs our cars to be up on the latest technology.  We expect the attorney who handles our estate planning to be well versed in the newest laws.  We expect our surgeon to know the most recent medical breakthroughs.  Why shouldn’t our clients also expect us to know the latest in insurance designs?

  As every agent knows, the only way to stay on top of things is to continually read company literature and industry brochures.  Insurance companies are probably a better source than any other for new trends or updated information on existing policies.

  Mandated education can also be valuable.  Agents often complain that courses seem repetitious.  This can be a problem if the agent tries to order only subject matter that they are already familiar with.  Some areas of insurance do not see great change, so courses will be similar to each other.  Some types of education are structured by state regulating authorities, which limits the course content. 

  Agents must take responsibility for their continuing education requirements in a timely manner.  No agent should wait until the last hour before seeking it out.  It is true that time can easily get away from us, but there is a simple solution: a short note inserted in an appointment calendar at least three months prior to renewal. Of course, ordering it is simply the first step; it must also be completed and returned to the providing company.

  Education providers are not responsible for an agent’s time requirements.  Nor are education providers required to keep a list of previously completed CE courses.  It is the agent’s responsibility to begin their education and complete it well before the actual due date.  Some providers do keep records of previously taken courses and will alert the agent if they are repeating.  However, this is a courtesy and not a state requirement.  Agents should keep a file with a copy of each Certificate of Completion in it.  The most recent course taken should be on top and the oldest on the bottom.  Many agents also prefer to tab the edges by year.  That way, an agent can see at a glance the year in which each course was taken.  If an agent is audited by the state, the agent must provide proof of all completed CE courses.  That means they must have copies of their certificates accessible.

  The internet has become a widely used method of completing required education and many states require education providers to notify authorities of CE completions.  That does not release agents from their responsibility to keep records of previously completed courses.

  States periodically audit agents. Why would an insurance agent be audited by the state?  There are many reasons.  If the company they purchased their education through felt that unethical behavior existed in completing the test, the state may be notified.  Some states actually require that the education provider notify them when suspected cheating occurs.  Seldom will the state tell the agent if the educational provider has reported them.  The state will simply request all records.

  The state might also simply audit on a hit-or-miss basis.  In other words, periodically agent records are pulled at random and then audited.

  Many audits are initiated due to consumer’s complaints.  In this case, an audit of the agent’s education is simply a part of the overall investigation.

  Agents are not the only ones who can be investigated.  Education companies can also be investigated if wrongful activity is suspected or reported.  Usually this would involve a company that did not follow required procedures, such as reporting suspected cases of fraud.  More likely, however, it would be because the state suspected that the education company was providing the answers to the test questions in an unethical manner.  Because of this, companies seldom let cheating go on among agents.  They are better off not doing business with the agent at all than risking the loss of their license with the state.

  When an agent does copy someone else’s test or cheat in some other manner, they will find that the state is not sympathetic with their reasons.  No matter how compelling the reason may seem, the state will expect agents to act ethically.  Would consumers want it any other way?

  States do change educational requirements periodically.  Not all states will notify agents individually.  Luckily insurance companies do a fairly good job of printing changes in their newsletters.  Of course, this means an agent must read them!

  Insurance agents are not the only professionals who must complete mandated education.  No matter what the profession happens to be, education is an important part of keeping current.

Responsibility

  Each agent is responsible for his or her education.  It is not the responsibility of their boss, secretary, spouse, or coworker to keep up with state requirements.

  What can be done when time requirements are due, but the education is not completed?  As an education provider we often hear requests that cannot be granted.  This happens in all types of businesses, of course.  The first step is realizing that education providers follow state requirements.  As such, we are not always in a position to deliver special requests.  Some requests are simply illegal (backdating a certificate of completion, for example) while others are against company policy.  Whatever the reason, the person requesting the service will show his or her professionalism (or lack of it) by their response.

  At one time it was considered assertive to insist upon receiving one’s own way.  Those who did not insist were considered less capable in some way.  While assertive behavior certainly has a place in some situations, assertiveness should not be confused with aggression.  Let’s look at the definitions:

Assert: 1. To state positively; affirm; declare 

2. To maintain as a right or claim, as by words or force - to assert oneself: to put forward and defend one’s own rights or claims.

Aggress: to undertake an attack; begin a quarrel

Aggressive:  1. Of or characterized by aggression or attack. 

                 2. Disposed to vigorous activity; assertive movement.

  As you can see, there is a difference between the two.  Stating positively one’s position can be done with elegance, calm and logic.  There is no way to be elegant, calm and logical while undertaking a verbal attack.   The word ‘verbal’ was inserted because that is the usual form of aggression. Of course, we have seen news accounts where aggression has been physical, often with deadly consequences.  Luckily, that is not the normal situation.  Most people, in fact, will be much more aggressive over the telephone or while driving than they will be face-to-face.  When aggression can be displayed without actual eye contact many people become more abusive than they normally would.  It has been suggested that people are venting their frustrations with their daily lives by ranting at people on telephones or driving aggressively.  Because there is not face-to-face contact, these people feel safer being verbally abusive or demanding.  Many of these same people would not act so offensively in person.

  Is there some emotional release in demanding something from someone else?  There may well be, but it still has no place in the professional’s life.  If some service is needed or just desired, the likelihood of receiving that service is much greater when requested in a logical, positive manner.  In fact, research shows that people respond much better to a positive approach.  People are more likely to respond positively when approached positively and negatively when approached negatively.

  Even our language reflects the way we feel.  When medication is given for an illness, we say: “He responded to the medication.”  If the medication does not work and produces an allergy, we say: “He reacted to the medication.”  We respond to the positive, but react to the negative.

  A former employee of a state insurance department relayed this story:

  “Anytime an agent called and became rude or demanding, I put them on the bottom of the stack.  Of course, I didn’t tell them that; I stayed pleasant and took their verbal abuse.  Some agents would call repeatedly because what they wanted still wasn’t done fast enough to suit them.  Each time they were abusive, I again put their file on the bottom of my ‘to do’ stack.  Most were never smart enough to figure this out.”

  Of course, this passive-aggressive response would seem to perpetuate the problem rather than solve it.  Most of us would prefer a solution.  In business, a solution is always the goal.

  Each of us is aware of own personal responsibility.  We know when we are asking someone else to fix what we failed to properly do.  These demands often have to do with our failure to properly comply with personal responsibility.  Educators we see some agents fail to complete required education in a timely manner; agents see the consumer’s failure to properly prepare financially for their retirement.  While we cannot correct an agent’s failure to acquire education, the field agent can contribute to correcting an inadequate retirement income.

  When an individual is requesting a service or an item and the clerk says they cannot deliver what is desired, is there a way to solve the problem?  There are several options, all of which can be utilized with calm and dignity.

1. Is the clerk simply unable to personally comply with your request?   Sometimes a supervisor can approve what a clerk cannot.  Rather than rant and rave at the clerk, the positive approach would be to politely ask for the supervisor.

2. If the supervisor also declines to comply with your request, ask for the reasons why.  Sometimes the explanation opens up new avenues that will work for both you and the business.

3. Make sure that you have adequately explained the reasons for your request.  By doing so, the clerk can often offer alternatives that will also work for you.  In addition, your explanation will demonstrate that you are a reasonable person.  Reasonable people are more likely to receive reasonable treatment.

4. Ask the simple question that is all too often forgotten: “What would you recommend that I do?”  The clerk or supervisor often has alternative options that will solve your problem.

5. If the business you are calling is unable to deliver what you want, is there another entity that could do so?  Sometimes we waste our efforts because we are requesting the service from the wrong place.

6. Many times, what we are requesting can be met, but what do we do if it simply cannot be done?  In the words of actor John Wayne: “Take it like a man.”  Sometimes we must accept “no.”  Even children realize that they can’t have everything.  Adults must also accept that fact.

  At no time should the process of asking for a service (which is often more along the lines of a personal favor) include rudeness, shouting, profanity, or sarcasm.  Politeness and poise is the mark of a professional.  No one should take another’s rude behavior personally since rude people use it indiscriminately in multiple situations. Any inferior behavior is a mark against the perpetrator, not the receiver of it.

When We have Failed to do Something Important

  We have all done it at some point in our lives: failed to do something we should have or failed to do it in a timely manner.  Maybe we forgot our mother’s birthday or maybe we failed to complete our education early enough.  Whatever the case may be, the fault lies with us.  Someone is disappointed in us; we feel guilty.

  Luckily our mother will probably forgive us.  A simple apology with a late gift will solve the problem.  Other failures will not be so easy to fix.

  How a person addresses their failures often says much more about them than how they address their successes.  It is easy to bow and say “Thank you.”  It is much more difficult to lower our head and say: “I’m sorry.”  Pride is often blamed for this, but it probably involves much more than pride.  There seems to be an instinctive desire in the human race to place blame elsewhere.  Even children know this.  From the time a child realizes that blame can be shifted, he or she will attempt to do so.  If parents fail to halt the blame shifting, the habit easily continues into adulthood.  Unfortunately, children often see their parents shifting blame, so what else would we expect of them?

  Everyone probably tries to shift blame at some point.  It might be when we are stopped for speeding (who wants a ticket?), when we return a pair of pants because we gained weight (they must have shrunk), or when we ordered our education with only one week before it was due (my secretary is supposed to keep track of this).  Whatever the reason, it would be surprising to find a person who has never attempted to shift the blame from oneself to another.

  Sometimes it seems innocent to shift blame if it will not really hurt anyone else.  “My dog ate my homework” is not likely to bring harm to the pet.  The danger in blame-shifting is not that it might harm another (although that can be a possibility), but rather that it might set the pattern for years to come.  This might especially be true if the blame-shifting is successful.

Setting up Professional Standards

  Every industry has professional standards.  Some of the standards are written while others are simply understood and accepted.  What begins as an unwritten standard often becomes a law when those in the industry do not voluntarily follow it.

  Some industries especially need moral codes since it affects people so profoundly.  Insurance is one of those industries; if fact insurance is the most highly regulated industry in the U.S.  As a result, there are many insurance laws on the books; some of those laws are federal and some of them are state.  Generally, it is not the written laws that a course on ethics would address.  Written laws must be followed in order to work in the profession.  Codes of conduct are typically the unwritten laws.  If they are followed with a fair amount of uniformity, they may never develop into written laws.

  Every day of our lives we make moral decisions.  In fact, not making any decision at all is even a decision.  The choice to take a stand or postpone taking a stand is still a decision.  There is no illusion here that a course on ethics will affect a person to any large degree.  Only if the reader purposefully chooses to take one path or another as a result of this course will it have any effect.  This is true of all things.  Simply being exposed to the information will not have any affect.  It must be a decision of the reader to go one direction or another.

  Even if a number of people read the same information on ethics with the intent of becoming more ethical, it does not mean that each person will reach the same ethical conclusion.  Ethics are not a concrete subject.  Generally, it is accepted that a person who does what they feel is right is behaving ethically, even if there is disagreement on the action itself.  Even when there is disagreement, however, those disagreements are within the framework of ethics. No course in ethics can ever eliminate disagreements.  However, since ethical decisions are made on the basis of reason rather than authority, the scope of disagreement is usually a difference in thought rather than fact.

Questions as Well as Answers

  Ethical issues are rarely black and white.  There tends to be many gray areas.  Because ethics are a matter of reason rather than authority, people will disagree.  Ethical discussions are complicated because there are so many questions involved and not always a lot of answers that can be set down by fact.

  A strong example of the complications of ethical issues has to do with abortion.  There are many good moral people on both sides of the issue and strong opinions exist on both sides.  As with all ethical issues, it is not a matter of one side being right and the other side being wrong.  Rather it is a matter of personal feelings of what is ethical and what is not.

  Because the nature of ethics is, in itself, a perpetual discussion, the topic often falls to philosophers who enjoy spending endless hours on such things.  The general worker doesn’t have the time or the inclination to spend time debating ethical questions.  However, they do live moral issues, which are ethics on a daily basis.

  Ethics have to do with an individual’s perceptions of right and wrong; it is not necessary for others or society as a whole to agree with them.  However, since most elements of insurance are legislated by either the federal or state government, few elements of it have to do with perceptions of right and wrong.  Instead, it has to do with following the law.  Most elements of insurance are affected by law in one way or another. 

Example:

  Desmond Drake works for an agency that mass-mails target groups of consumers.  In this case, they have mailed individuals aged 30 to 60 for a specific product.  If the consumer is interested, he or she fills out a response card and returns it.  The return card specifically says an agent will call on them.  Even though they return the card, once an agent arrives at their door many people will refuse to hear a presentation.

  When Desmond approaches the door, he knows he must be allowed to enter the consumer’s home if he is to sell his products.  Which of the following options would you select?

1. When his knock is answered: “Good morning, Mrs. Green.  My name is Desmond Drake.  I represent XYZ Company, and I am here in response to the card you returned to us.  Is this your writing or your husband’s?”

2. When his knock is answered: “Good morning, Mrs. Green.  My name is Desmond Drake.  I am here regarding the changes that are coming in your retirement plan.  Are you aware of those changes?”

3. When his knock is answered: “Good morning, Mrs. Green.  I represent your retirement plan.  May I come in?”

4. When his knock is answered: “Good morning, Mrs. Green.  I am licensed by the state to talk to you about your retirement planning.  Is now a good time for you?”

  Agents are required to identify themselves and their company.  Any response that does not include both is in violation of statute.  Unless Desmond Drake actually represents the consumer’s retirement program, he would also be in violation by stating that he did.  Finally, while he is licensed by the state (insurance license) this statement is clearly meant to misrepresent who Desmond is and why he is there.

  Agents are exposed to ethical choices every day:

1. “I get a better commission with this company, but the product is not as good as it could be.”

2. “If I accidentally leave out the financial rating my client will never know and it really is a good company.  I’m sure the rating will go up”

3. “Even though this consumer has a good company already, I will give better service, so I am going to replace it with my product.  I need the commission.”

4. “I will temporarily use the premium my client gave me, but just until I get my commission check; then I will send in the premium to the insurance company.”

5. “Good morning, Mr. Brown.  Your agent is not in at the moment, but I can help you with this.  I’ll be sure to give this to your agent once he comes in.”

6. “I see you have had some heart related illness this last year.  However, the company is not concerned since you are doing so well now; it is not really necessary to write the information down on your application.”

  Agents have a moral obligation to their client, their insurers and certainly to themselves and their families.  While agents must be able to earn enough commission to pay their own bills, they owe it to their clients and the companies they license with to treat all situations ethically.  This means they must disclose complete information to their insurers on the applications and to their clients when representing a product.  Therefore:

1. At no time should the commission earned be the deciding factor when presenting a product to a client.

2. Even if the agent perceives an insurer to be a good company, he or she is always obligated to give their clients the financial rating of the company.  The choice is not the agent’s; it is the applicant’s.

3. The desire for a commission is never an acceptable reason to replace an existing product.  While some products should be replaced with an updated better version, many others should not be.  This would especially be true if increased age affected the replacing policy.

4. It is never legal to use premium collected for personal use – NEVER.  There are no circumstances in which this would be acceptable or legal.

5. If Mr. Brown’s business is given to his established agent, then the agent who helped him has done a service to both the agent and his client.  If, on the other hand, the agent who helped Mr. Brown signs his own name to the application and collects the commission himself he is not ethical. He told Mr. Brown that he would give this to his regular agent. Not only will he announce himself as untrustworthy and a liar (Mr. Brown’s agent is bound to discover the new policy), but also it is likely that Mr. Brown will cancel the policy when he discovers the trick that was played on him.  Mr. Brown may even file a complaint with the state’s insurance department.  We often hear that commissioned industries like ours pit one representative against another.  While this is true (insurance is a replacement business) that does not mean that it is permissible to lie to a client.  If the second agent intends to keep the commission, he is ethically bound to let Mr. Brown know this so he can make a decision as to which agent he wishes to deal with. If Mr. Brown’s established agent has already presented the product and agent number two is merely taking advantage of that, then he has no claim at all to the commission – even if he is honest about taking it.

6. Agents have a moral and legal responsibility to their insurers.  If an insurer asks for an applicant’s medical information the agent is morally and legally bound to supply it.  This goes beyond simply sliding the application across the table to the applicant; the agent must review the information for accuracy.  Under no circumstances is it permissible to omit required information.

Professional Conduct

  Talk about opinions!  When it concerns professional conduct just about everyone has one.  If we want to keep it simple, we can state that professional conduct is that which gives pride to the profession represented by the individual.

  All of us want to feel pride in what we do and who we are.  What we do and who we are is interrelated, of course.  Even though no one is the job they do, the job they do does reflect on who they are.  If one’s job is to sweep the floor, they are reflected in the way they perform the task.  If the floor is kept spotless, that says a great deal about the worker.  If the floor is never really clean, that also says a great deal.  It is the difference between going to work for a paycheck and going to work for the company.  The one who goes to work for a paycheck has little regard for the job they do and will probably never perform splendidly.  The one who is proud of their profession and employer will perform far better than the individual who has no sense of profession or pride.  As a result, their work performance will likely be outstanding.

  Each business has a responsibility to the worker in this regard.  It is hard to work “for the company” if the company is mean-spirited and uncaring.  Many American companies are beginning to realize this.  As a result, they are looking at the needs of their employees in new ways.  Childcare centers are springing up, as well as job-sharing and other innovative alternatives.  Since most insurance agents are self-employed, however, these types of things are probably not going to be part of their work experience.

  For the self-employed “the company” is themselves.  How the agent dresses, talks to others and carries through on their work reflects on “the company” (their own person).  As a result, one would think that it would be especially important to them to be a true professional in every sense.  That is not always the case.  Other factors enter into the picture: greed, frustration, fear, anxiety, selfishness, or any other human trait.

  Few people consider ethics in absolutely every decision that is made.  Perhaps it would become too cumbersome.  When every business or personal decision must have ethical consequences weighed, it could become difficult to make any decision at all.  Because of this, most people simply have a basic code of right and wrong that they follow.  Of course, there will be mistakes made, but that is also part of life.  If mistakes alter future decisions, the mistake actually becomes part of growth and is, therefore, a positive thing.  A person who becomes fearful of mistakes cannot experience growth and growth is often a moral path.  To stand still without growth is perhaps unethical in itself.  Ignorance is often the term used for someone who quits growing.

Ethics in the Workplace

  Most states have adopted an ethics requirement as part of the mandated professional education requirements.  While we feel most agents are ethical there must be a reason the states feel this is a necessary requirement.  It is likely that state insurance departments realized that many agents work on their own without benefit of a sponsoring organization.  Of course, having a sponsoring organization is no guarantee that ethical guidelines will be instituted.  Either way, by mandating such education there will be no excuse available to unethical actions.

  While any profession calls for ethical standards, some professions especially affect others, with insurance being one of those.  An essential characteristic of being ethical is a willingness to put the interests of others before oneself.  Since insurance deals with financial matters that can affect a person’s well-being many years later, insurance must adhere to moral guidelines.  An insurance agent who considers their commissions over the results of the policies written may affect his or her clients in very adverse ways.

  While we would like to believe that all agents are ethical, we know that is not true.  Regardless of the profession, there are those who do not live up to moral expectations.  Why does one person choose to behave ethically while another does not?

  There are many reasons why one person chooses to be ethical and another one doesn’t.  Of course, no one actually declares: “I am going to be unethical.”  Rather, it is a progress of continually thinking of oneself over others.  After a period of time, this selfishness becomes a habit, a way of living each day.  When this attitude is part of the way one conducts business, it becomes especially serious since it affects not only the salesperson but all his or her clients too.

  Philosophers give many reasons why people act in their own best interest rather than in the interest of others.  The general public knows the main reason, however: simple greed.  The individual states have mandated laws to protect the consumer from those that are most flagrantly greedy, but it is impossible to legislate greed completely out of our society; it will always exist.  That is why states also try to educate their consumers so that they can avoid the worst of salespeople.

  It is unfortunate that the few in the industry that are unethical cause those who try to do a good job to jump the same legal hoops.  While they vary from state to state, these legal hoops often include increased industry education, specialized education (such as ethics), replacement and specialized forms, and consumer laws.  Consumer legislation attempts to protect the consumer from the unethical salesperson or the unethical business entity.

  Not only individuals have an obligation to be ethical.  Business entities also have these obligations.  It could be argued that a business entity is nothing more than a group of people running the company.  The ethical standards of each person involved will reflect itself in how the company performs.  Therefore, it could be said that individual morality eliminates the need for business morality.  When business ethics are discussed, it usually is looking at the business as an entity and not as a group of individuals.  In the newspapers we often see stories of corporate greed.  Although the corporation is made up of individuals, their group purpose has to do with the prospering of the company itself.  The company is an entity rather than a person, so the group of individuals seeks to give financial gain to the entity.  Of course, the entity then feeds back the financial gain to those in power.

  Rather than argue the point of whether or not a corporation can be greedy, we prefer to look at a more productive line of thought. It really makes no difference whether corporate greed exists (versus individual greed) since the results are the same.  When a company dumps chemicals into our water system, or a garbage company dumps our garbage into a landscape, or a financial company misleads the elderly into unsound investments, someone somewhere or some company somewhere profits.  The company that dumps the chemicals does not have to pay for proper disposal; the garbage company that dumps our city’s garbage improperly does not have to pay to protect the environment; the financial company that takes in thousands of dollars with no remorse for those who will lose all demonstrate corporate greed.  Nearly always, corporate greed is intended to ultimately reward individuals who benefit financially.

  When greed brings profits, why would an individual or a company choose ethical standards for themselves?  For some, it is a desire to demonstrate to others the importance of leaving behind a legacy of strength and stability.  After all, it is the stronger person who behaves morally. Greed is often the easier path to follow.  For others, it is a belief in Christianity or another faith that dictates certain behavior.  Even for those who may not have a religious factor involved, ethical behavior may simply be seen as the correct way to live.  For these people, there is a strong belief in right and wrong.

  Not too surprisingly, many people say they believe in ethical behavior for a very logical reason: if no one behaves morally, they themselves will become a victim in some way.  It might be their water that is ruined by chemicals, their land that is soiled by garbage, or their money that is taken in a financial scam.  These people believe that everyone and every company need to be ethical as a means of self-protection.  Believing this, they also feel that they themselves must be ethical.

  It is not surprising either to realize that no one person or controlling group can state what is ethical for others.  Ethics are not always the same for every person or business.  Ethics are more often tied to beliefs than to laws, although laws often reflect the morals of the time.  Our goal is not to define what is ethical, but rather to offer tools the reader may use to define their own ethical paths.  Any ethical concept we might suggest would have flaws anyway, depending upon a person’s point of view.

Ethical Excellence

People often fail to recognize that moral excellence directly benefits a company and all of its workers.  If the company publicly sells stock, then moral excellence also benefits every stockholder.

  Many philosophers argue that companies, being entities, cannot be greedy or immoral in any way; only those in power may be.  Just as greed belongs to individuals rather than companies, excellence also belongs to individuals rather than companies.  Therefore, a company that is progressive and offers values for their employees is really projecting the views of one or more individuals who run the company.  Individuals, not companies, create ethics.

  Ethics in the workplace does not happen by accident, although there may be occasional explosions of excellence that happen without design.  For a uniform and consistent atmosphere of ethical excellence to exist, it must be created and continued by those in charge.  Few companies are lucky enough to have a person or panel of people with enough vision to realize the need for moral excellence in the workplace.  Certainly, every executive wants loyal and honest workers.  What they often fail to realize is that such workers will only stay where they feel their values are recognized.  Where is the incentive for a worker to be loyal to the company if the company is not also loyal in return?

  There are some dramatic examples of companies formed on a sound basis of moral excellence, such as Ben & Jerry’s Ice Cream, but most companies’ form for other reasons.  All companies have a goal of profit (they’d all go broke otherwise plunging their employees into unemployment), but this goal must be balanced on a foundation of morality.

  It might be thought by some that morality and business do not go together.  Nothing could be more wrong.  In fact, businesses that do integrate the two are more likely to be successful in the long run.  Why?  They are more likely to find and keep valuable employees that stay long-term.  Strong moral leaders are willing to do what is right even if the line of profit may not be as high.  Moral leaders will run their business according to specific guidelines, including environmental factors, worker safety, and long-term goals for both the company and the employees.

  All companies follow some kind of strategy.  Their goals may vary and employee relations may vary, but there will be some kind of strategy.  Some companies originally built on excellence found themselves in financial danger when new leadership allowed the company to lose sight of moral excellence.  As workers became discouraged and lost pride in their performance, products lost their quality.  No company can continue without a united work force that is proud of what they do.  Some company executives attempt to correct problems with confusing or alienating policy memos and dictums.  Consider U-Haul who canceled agreements with its independent dealer networks and tried to open company-owned moving centers.  This greedy move forever changed the good working relationship they had shared with trusting dealerships.

  The Ethisphere Institute, an international think-tank, follows businesses around the world and analyzes their ethical standings.  They say they do not give “rankings” since any company operating ethically is a winner but rather they recognize ethical superiority.  Companies can be nominated or even nominate themselves.  Some information on the companies included can be verified through public records but other information must be submitted since it is not publicly available. There are problems with this system of course since some very moral companies will not be included and the companies that nominate themselves want to be perceived as moral.

  Just as customers recognize excellence when they see it; so do workers.  All successful companies require both customers and employees.  Business today is vastly different than it was fifty years ago.  Today’s companies must work in a partnership with their employees so that the third element (clients) can be continually maintained.  Many companies do not seem to understand this.  Even insurance companies were guilty of this, finding reasons to terminate insurance agents once their client base was built up, keeping the business of course, but without paying commissions.  Many states eventually passed legislation to stop this practice.

  In the past business worked on six basic principles:

1. Set goals and establish policy and procedures

2. Organize, motivate and control workers

3. Analyze situations and formulate operating plans

4. Respond to change through new strategies

5. Implement new policies & procedures

6. Produce the desired profit line

  While these basic principles still apply some new skills are also desired, including:

1. Creativity

2. Acknowledgment of worker’s needs

3. Versatility

4. Focus on future trends

5. Integration of skills

6. The ability to listen effectively

Asking the Right Questions

  We often admire people for their skills with others, often referred to as “people skills.”  What we may fail to notice is a simple procedure these successful people follow: they seem to know the right questions to ask.  This is true both professionally and socially.  This ability is often called “insight.”  Such people seem to instinctively know how to get others talking.

  While asking the right questions is important, it would do little good if a second quality did not follow: the ability to listen.  There is no skill more important in today’s world than the ability to listen to others.  Listening does not simply mean keeping quiet while another talks; it means absorbing what the other person says.  Many professionals like to state back what was said in their own words.  This allows them to retain important information.  The ability to retain is especially important to the salesperson that must focus on the desires and needs of their clients.  In the book Creating Excellence by Craig Hickman and Michael Silva, they state, “executives lacking insight see either the forest or the trees, but never both.”

Listening: The Route to Success

  For the salesperson, listening is the only route to success.  Without it, the salesperson might hang on for a period of time, but he or she will never really experience the thrill of success.  Not all great listeners are sales people, of course.  Oprah Winfrey is one of the greatest listeners of all time and this skill has made her rich and famous.  She took the art of listening (and sensitive response which only happens because she listens) and built a television show around it.  Although she is gifted in many ways, it is her ability to listen and understand that has made her best known among the talk shows.  Others have also capitalized on their ability to listen including Barbara Walters and Larry King.

  Salespeople are often taught a specific format which they are supposed to follow during their presentation.  Too often the salesperson concentrates so hard on following this format that they simply shut out everything else.  The salesperson is so afraid that they will make a major error in the words they themselves say that they forget to listen to the words of their potential client.  Certainly, it is important to follow a format for the presentation.  Following a set presentation format is even a legal protection for the agent since it demonstrates a pattern, which can be relied upon if a lawsuit is filed.  However, the presentation must leave room for the client’s needs as well.  Only by listening to these needs will the presentation ultimately be successful.

  A salesman once said in exasperation “I hate it when I have spent time explaining what I’m offering and the client says ‘It sounds great, but I have to think about it.’  What is there to think about?  It’s a great product!”

  This salesman made a common mistake: he had spent so much time listening to himself (his presentation) that he failed to listen to the potential client.  Since his presentation had satisfied his needs, he saw no reason to satisfy the needs of the client.  What are the client’s needs?  I can’t tell you.  Only the one listening can.  Each client’s needs are individual and only by listening when they speak can you discover them.  These needs are labeled many things.  Sales promoters often call them objections.  How often have you heard the statement that an objection is merely “a way of telling you the consumer needs more information?”  While this may be true, the truest statement is simpler than that.  An objection is the client speaking.  Are you listening?  Are you asking the right questions?  Unless you listen, it is impossible to even know the right questions.  Let’s consider this scenario:

  Ralph is selling burial insurance to a woman who is 30 years old and single (although she is engaged to be married in six months).  The woman, Sally, did mail in a card and then set up an appointment from a telephone call that Ralph made, so there was some point of interest on Sally’s part.

  Ralph came on time for the appointment, he was dressed professionally, and he was a gentleman in every way.  The scene could not have been more positive for a sale to be made.  So why, at the end of the presentation, did Sally tell Ralph she just couldn’t decide yet?  Ralph felt it was due to her young age.  Most of the people he dealt with were older, established and married.  Please note that I said Ralph “felt” it was due to her young age.  He never actually asked.

  In fact, Ralph missed an opportunity to ask many questions prior to beginning his presentation.  Perhaps he had already thought the sale was doomed from the beginning due to some preconceived idea about what his buyers should be.  Perhaps he merely was concentrating so hard on his presentation that he failed to listen to what Sally said.  Perhaps his mind was on something entirely different than the present situation.  For whatever reason, Ralph lost a sale that should have happened.  As he left, Sally felt he was nice and professional, but she had no urge to buy anything.

  What questions could Ralph have asked?

1. “Why did you mail in this response card?”

2. “Does anyone in your family currently have a burial plan through an insurance company or elsewhere?”

3. “Have you discussed this with your fiancée?”

4. “What other plans have you made for your death?”

5. “Do you have a specific interest that I should address?”

6. “Is there anything specific that you want to talk about?”

  Of course, Ralph could not allow Sally to simply ramble on.  He needs to keep some type of control over the selling presentation, but that does not mean that he must do all the talking.  If the conversation becomes sidetracked, by simply asking a question regarding the sales product Ralph can bring the conversation back to the topic.  Unless he listens to the answers, however, asking questions will do little good.  While listening, if Ralph is uncertain of what Sally means, he must say so.  This will bring further clarification.  Through this clarification, all of Sally’s concerns will be answered and she will be more likely to purchase the product and the product is more likely to appropriately address her concerns.

Patience, Patience, Patience!

  Sales is always about patience, whether we like it or not.  It is true that, for some, sales are a natural thing.  For these individuals no struggle is apparent from the first day in the selling field.  For most, however, building a career in sales means doing many necessary things, including obtaining product education, establishing a client base, and learning how to serve existing clients.

  No matter what profession a person is in, it must be considered for the long term.  Otherwise, it is not a profession, but simply an occupation for today.  Long term planning has to do with many aspects, including planning for oneself in retirement.  It is amazing the number of people who sell retirement planning packages and yet have put nothing in place for themselves.  It is difficult to believe that the agent who has not prepared his or her own financial future is in any position to help another prepare theirs.

  Sales seminars often tell us to “picture in our minds what we want for our futures.”  This can be a valuable tool, but it should never allow us to lose sight of what we must do for ourselves.  Simply wanting, wishing, and hoping (which this picture technique can turn into) will never take the place of strategic planning.  If sales were easy, everyone would be doing it.  Therefore, it stands to reason that building a successful sales career is difficult, demanding, and sometimes downright frustrating!  Any type of excellence, whether it is in sports, business, or personal relationships requires effort.  That is why it is so important that ethics be a part of the plans.  Without a direct decision to be ethical, it would be very easy to get caught up in all the other aspects.

  Ethics can often be forgotten when quick-fix solutions are sought. While some things may have a simple fast solution, if the solution is not based on fundamentals of right and wrong, the solution is anything but permanent.

Customer Satisfaction

  Perhaps nothing is more difficult than dealing with the public.  Each person brings their own individual thoughts and expectations, some of which are not well expressed.  Few of us have actually received any training on how to deal with people.  We do so on a hit-or-miss basis drawing upon past experiences.  Our training is more often on the technical parts of our jobs.  Certainly, we need to understand our products.  No one is disputing that.  However, that is only half of what we do.  The other half is providing customer satisfaction.

  There is one other aspect of relating to people that should be stated: working well with each other at the workplace.  This includes coworkers, managers, and those in support jobs.  It even includes relating to workers in other companies that relate to our jobs.  Without the support and cooperation of internal people it would be difficult to provide the satisfaction our clients need.  It is unfortunate that so many people seem unable to deal effectively without making demands.  When internal relationships run smoothly, so will everything else.

  Why should we attempt to deal pleasantly with others?  Besides making our jobs easier, we are also likely to feel better about ourselves.  Study after study has shown that excessive anger harms us physically.  Blood pressures and heart disease are higher in angry people.  When we are able to be positive in our approach with others, we also seem to accomplish more in less time.  Arguing takes up an incredible amount of time.  In addition, once we are agitated, it takes longer to get back into a positive flow of production.

  Agents expect to accumulate an increasing amount of clients, but they are seldom prepared for the rejection that is part of that process.  If the agent is not equipped to move on following a negative experience, that negativity is likely to follow him or her to the next home.

The Difficult Customer

  No matter what our profession, there are going to be some people who make any situation difficult.  Sometimes, no matter how hard we try we will not be able to satisfy the difficult customer, whether a current client or a prospective one.  When this happens, we must be able to keep our own perspective so that their negativity does not spill over into our lives.  If we allow their negativity to affect us, it is likely that there will be a domino effect; each person will pass the negative feelings on to the next.

  Ironically, the toughest people we deal with are sometimes coworkers and family members.  Their negativity is constantly present making it difficult for us to remain positive.  If the person is a coworker, it is less difficult because we can keep the relationship professional rather than personal. It is much more difficult when the negative person is a family member.  Often it seems we have no escape, unless we learn to deal with them on some distant level.  This can be extremely difficult if the family member is a spouse, child or even a parent.

  Anytime a difficult or argumentative person must be dealt with, it is very important to keep the subject on the topic itself.  Never should the topic move into personal attacks.  The types of issues will vary depending upon the individual’s job, but often they tend to be among several common situations.  For example, someone might be:

1. Blaming an individual for problems over which he or she no control.

2. Pressuring an individual to take blame regarding their own responsibilities.

3. Unwilling to provide information needed to accomplish a task correctly.

4. Expecting an individual to change or alter something that cannot be done.

5. Expressing anger about a situation the individual did not participate in and has no control over.

6. Wanting an individual to take the blame for his or her shortcomings.

  Most people can be told what is and is not possible and deal with it.  With the difficult person, this is not the case.  The difficult person will continue to demand what cannot be given.  There is no solution with someone who will not listen and insists they receive what they want.  Despite the difficulty of the situation, it is important to remain professional and remember not to take it personally.  This is easier said than done, but there really is no other course of action available.  When the difficulty relates to a policy that was written, it might be possible to call the home office to see if they can suggest something that will satisfy the client.  If there is nothing available to solve the problem it is sometimes best to terminate the policy.  When this is the case, it is important to have the client request the termination in writing.  Agents should never cancel a policy unless the request is put in writing.  A written request provides legal protection for the agent.

  Overall, the practical approach is always the professional one.  Such an approach also saves time because the professional engages in no arguing.  The person at the other end may still be trying to, but the professional refuses to join in.  At all times, the professional must stay on the topic.  Never resort to name calling or criticism.  It simply is not productive.  A professional approach often calms the difficult person, but if it does not, simply solving the problem will help.  Remaining calm and professional is necessary when solving any problem – business or personal.  Of course, the difficult person will never admit he or she is wrong so the professional must realize that such people are simply part of our world, whether we like it or not.

Preparing for the Inevitable

  No one can be prepared for every situation, but we can prepare for some of the more obvious ones.  We can do this by rehearsing what we would say or do in a given situation.  In many ways, this is similar to practicing our sales presentation in front of a mirror.  In this case, however, the ethically motivated person is practicing the situations that might occur at work or in the sales field.  The agent might practice telling a coworker that he or she is not willing to let another person copy their test.  The agent might practice telling the boss that other agents are copying signatures.  Whatever the case may be, by rehearsing what will be said, there will be less stress when it is carried out.

  Luckily, most people are ethical most of the time.  Probably no one is ethical every moment, but overall people do tend to do what is right.  Even so, it does help if a person visualizes what they would do in a given situation.  More than that, it means an individual must actually take a moment to decide what their moral position is.  By visualizing their moral position, it actually helps to cement it.

Using Specific Language

  Every salesperson knows that some words calm and other words incite.  Therefore, when dealing with a difficult situation, word usage is very important.  Excellence at anything comes from experience so the more one consciously uses good word choices, the better he or she will become at it.  Eventually, certain word choices become automatic, a habit.

  In any situation, a warm friendly voice is calming.  It is difficult to define a warm voice, but we know one when we hear it.  Such a voice is even and unemotional but gives the tones of someone happy to deal with us.  It is this feeling that the person at the other end of the line is happy to be talking to us that makes us feel more cooperative.  Some customer representatives do all that is necessary to help us, but they have an edge of irritation to their voice that is unmistakable.  Of course, we do not know whom they just dealt with.  If it was someone difficult, then the negativity of the previous conversation was brought into the next, like a line of dominos falling one by one.

  There are some things one can do to ease tension and bring a better voice to the conversation, whether by telephone or in person.  Deep breathing definitely helps.  The act of breathing in, holding it momentarily, and then letting the air out slowly, will release tension.  Once that tension is released, one’s voice appears calmer.  Physical exercise also works, but that is more difficult to do in some situations.

  As we said, some words are better choices than others.  When someone is requesting a service, it is always better to say: “I will” than it is to say: “I’ll try.”  Of course, it is important to be able to do what is requested rather than promise what cannot be given.  Even if an immediate answer cannot be given, knowing what steps are going to be taken may bring satisfaction.  Using the words “I will” also sets your own pace because you have told both yourself and the client what you will be doing.  It is important that you follow through on any “I will” words.  Otherwise, the next time the words are used, there will not be any confidence in them.

  Do not use words that blame, even when blame seems called for.  The fact that someone did not call on a timely basis is obvious; stating that fact does not help.  Rather than say: “You should have”, it is better to say: “will you?” and offer a solution or a possibility.  Any words that begin with “you should have . .” puts the person on the defensive.  A defensive person quickly becomes irritable and difficult.

  In business, the goal is always to solve; most consumers are looking for solutions. Therefore, any words that help this process make sense.  Sometimes it is necessary to tell a person “no” but there are many things that can follow that negative word that will soften the context.  For example, “No, Mr. Johnson, we are not able to fax that to you, but you can have it sent overnight.  Would that help you out?”  Even though Mr. Johnson was told “no” it was followed with a possible solution.

  If the word “no” can be eliminated entirely, that is even better.  For an example: “Let’s see what we can do, Mr. Johnson.  How about sending it overnight to you.  That way, even though it can’t be faxed, you would still have it tomorrow. Would that help you out?”  Everyone responds better to what can be done than to what cannot be.  Anytime the words “you can” or “I can” are used, the image is positive whereas “no” is always negative.

  Successful salespeople quickly understand the importance of words.  The right words can take a person from impatience to cooperation.  People always want to know the reasons behind an action or thought. Simply saying “no” is closed and negative, but giving a reason often opens up new possibilities.  Those new possibilities may turn a “no” into a new solution.

  Finally, simply letting a client know how things are progressing will keep tempers down.  Even if no news has come forth, a telephone call will put a client at ease because he or she knows you have not forgotten them.  It is a wise professional that keeps in touch when a solution is being formulated.  In fact, clients are more likely to refer an agent who solved a recent problem for them.

Family Obligations

  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 or not 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 an individual are 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 associated with 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 theories.

  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 of 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 blame to another is unethical in itself.

  The states have been mandating 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, make multiple choices each day. They range from simple ones, such as what to eat for lunch, to the complex, such as whether or not 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 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 measure 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 consequence. 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 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 were 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 can’t be done.  Whether or not 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” which 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 for 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 some 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.

  In addition, those who use brute strength to prey off of 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 of her clients receive her personal attention, when she is focusing on a single client all of 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 of 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 well-being 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?

  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 by 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 or not 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.

  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.

Can ethics be taught?

  Can ethics be taught?  This is disagreement on the answer.  Some feel ethics can be taught if the situation is right.  For example, parents teach their children ethical attitudes from the time they are born.  Those attitudes are taught by the parent’s words and actions. Unfortunately, what is taught is not always as intended.

  Much of what one obtains in ethics is taken from their religion.  Does a person have to be religious to be ethical?  Certainly not.  Ethics is not tied to religion.  However, religion is tied to ethics.  Mainstream religions advocate ethical behavior.  Religions keep their ethical teachings fairly pure if they follow the Bible.  In other words, those that believe in following the Bible will be similar from church to church because the Bible is similar from printing to printing.  Of course, different interpretations might exist, but the basic teachings will be the same.  In addition, there are only a few points of the Bible that might not suit everyone.  For example, all people generally believe that it is wrong to kill.  The purist will be against all killing, even when sanctioned by law (such as the death penalty).  People who are against killing may not be against abortion.  This is where different interpretations of the facts exist.  One may believe a fetus is a person from the moment of conception while another believes it does not occur until life outside of the body is possible.  Each side of the issue tries to persuade the other.

  The Bible may also be used by those who wish to perpetuate a philosophy of hate against a particular group.  Of course, we know the Bible does not promote hate, but those who do will use sections for their own benefit.  Even when America was trying to end segregation, the Bible was used to support segregation.  As with all things, facts can be selectively used to verify a desired position.

  Philosophers often point out that the truly ethical person studies all the facts.  One cannot be ethical and only listen to one viewpoint.  Since ethical standards must be based on logic and reasoning, obtaining all the facts is essential.  A great leader once remarked about a change of belief “I have learned something new.” It is the willingness to “learn something new” that is the base of ethical thinking.  Occasionally we may feel that changing our mind is a sign of weakness.  Pride gets in the way of logical thinking and ethical conduct.  In fact, business leaders who are able to accept new ideas and trends are often the most successful.  Salespeople who adapt to new products are routinely the leaders in their fields.  The ability to change and adapt as new facts and technologies emerge is an important quality.  Even views of morality need to be able to change and adapt as conditions, circumstances, and facts change and emerge.

  Variability in moral judgments is often nothing more than different amounts or combinations of knowledge.  We try to make the best decisions possible with the information we have available.  As more information becomes available, views of moral judgment may change.  This is not a bad thing.  Morals must be able to change and form as knowledge is added or corrected.

  When looking at any issue, some facts are bound to be more prominent than other facts.  Even the way an issue is stated can affect how one believes.  For example, what one person considers religion another may consider superstition.  One person heard the facts from a different standpoint than the other.

  The requirement of knowledge (schooling) is often an attempt to provide additional facts with the end goal being a broader base from which to form opinions.  While it is probably true that ethics cannot be mandated, they may be taught.  That is, a person’s view may be broadened or changed due to additional facts.  When a person’s view is expanded, their activities will usually reflect this.

A Moral Habit

Habit: “an act or practice so frequently repeated as to become almost automatic; a tendency or disposition to act consistently or to repeat.”

  Funk & Wagnalls Standard Desk Dictionary. 

  Are morals merely a habit that we continue to follow without thinking?  In many ways, they are.  As children, for example, our parents taught us certain paths they wished us to follow.  Once we had followed those paths often enough, they became the accepted way to go.  Even if we do not fully understand why we believe certain things or don’t believe others, what we have done and believed for years becomes part of who we are; they become part of our thinking process.  Such habits become part of our personality.

  Most activity is performed without a thought to the complexities of moral rights and wrongs.  Ethics still play a part in the activities, but not necessarily a conscious part.  In many ways, morals are simply habits.  A person gets accustomed to thinking and behaving a certain way and they continue to do so out of belief and repetition.

  A single act seldom defines who we are, although a single act can affect others around us.  The man who rushes into a burning house and rescues another certainly affects the person in peril as well as their family members.  That one act affects many people.  However, that one act does not define the hero.  It may have been a single act that is essentially out of character for the individual.  Most of us are glad that a single act does not define us.  Probably everyone has committed an act or said some words that they deeply regretted later.  We would hate to believe that one senseless act defined us for our lifetime.  On the other hand, the hero would like others to believe that he is courageous all the time.  Even when we do not admit it, how others view us does affect our actions or even our own opinions of ourselves.

  We tend to especially admire those who seem to do the “right” thing consistently, even when there will be no recognition or personal gain.  That admiration does not always mean, however, that we desire to follow in their footsteps.  Few people would want to do what Mother Teresa did.  Although we admire her, we do not necessarily want to face the same hardships that she willingly took on.  Mother Teresa is a prime example of being ethical by choice.

  We read fiction and nonfiction books about people that do fantastic things, endure great danger, or demonstrate enormous mental abilities.  Books allow us to live someone else’s life without the danger or stress that would exist if we actually performed the feats.  We may dream of skydiving or enjoy reading about it, but that does not necessarily mean we plan to carry through and actually perform the activity.  In short, what we say and what we actually want to do are often not the same. 

  Ethical conduct, while varying from person to person, has some very stable basics within any particular society or country.  France might be different than America, but approved ethical conduct will be basically the same for all Frenchmen and the same for all Americans.  Therefore, all French citizens will have some basic, common ideas, while Americans will also have some basic, common ideas.  However, what the French believe and what the Americans believe are not necessarily the same.  Each country’s belief is correct even though different.  Ethical conduct is always about what is perceived.

  We know in America that it is not condoned to steal, lie, or kill.  That is not to say that it doesn’t happen.  In fact, many Americans feel they have a right to do these things.  At least, they rationalize it for their own benefit.  What they do not believe is that everyone has a right to do it; only themselves or their group.  For example, certain hate groups feel they have a right to injure minorities, but they do not believe that minorities have a right to injure them.  A few anti-abortionists believe they have the right to kill doctors or clinic staff members, but they do not believe that the same doctors have a right to kill them.  Our history is full of examples of one group intending rights for themselves, which they purposely deny to others.  Rationalization is a marvelous thing; it allows a person to believe they are somehow special and deserve special things or treatment.

  Do such people really believe they have special rights?  It is hard to know.  The human mind is complicated and even the experts disagree.  From a purely logical standpoint, it would seem that such people know they do not deserve special privileges, but hope to convince others that they do.  If they are successful in convincing others, then society might actually let them get away with it.  Children try this with their peers.  If they can convince their playmates to always let them be the hero, they will do so.  Such actions ignore right and wrong in favor of getting power.  For children, it is usually nothing more than getting their way.  In adulthood, it is still about getting one’s own way, but it also involves such things as greed, power, and gratification.

Violence in the Name of Ethics

  The words, ethical violence, seem to be incompatible.  However, it must be remembered that ethics do not necessarily follow the moral judgments of others.  The pure ethicist will not believe that morality (ethics) can ever be compatible with violence.  Indeed, Martin Luther King advocated nonviolence because he was an ethical purist.  He applied the same standards to himself that he applied to others.  Therefore, if it was wrong for another to harm a black person, then it was also wrong for a black person to harm another.

  Our history, unfortunately, is full of violent acts performed in the name of morality.  In the truest sense, if the person believes their actions to be right, then they are personally ethical, even if their actions do not follow the stated laws.  The key word here, is believes.  Rationalizing is not the same as truly believing.

  For the person who does really believe in what they are doing, even if their actions are incompatible with the laws or the majority of the population, they are still behaving ethically.  This happens more than we might realize.  In Nazi Germany, many people hid their Jewish neighbors and friends, even though it was against the law to do so.  During America’s days of slavery, many people worked to help African Americans escape into Canada.  During the Vietnam War, our own citizens escaped to Canada, even though it was illegal to evade the draft.

  When acts become violent, more is involved than a purity of beliefs.  Ethical actions typically do not involve violence.  No matter whose philosophy is considered, seldom do mainstream philosophies include violence to others.  Of course, there are many philosophies that are not mainstream.  People rationalize hatred of other cultures or races by telling ourselves that they “not the same as us.”  This is not a new rationalization.  Violence in the name of ethics can nearly always be broken down into some form of rationalization.  Why?  Because ethical conduct is a logical, thinking process.  Ethical behavior even involves the ethical treatment of other animal species, so violence cannot be condoned towards any other human species or group.

  Is the element of death always considered to be violence?  No.  This is why the subject of ethics becomes so confusing.  In the past, Eskimos believed it a just act to kill aging parents.  In fact, the parents themselves believed in it.  The killing of aged parents was not considered an act of violence at all.  Each society develops their moral standards on the basis of what is best for the group as a whole.  In the Eskimo society, at that time, it was best for the group to eliminate anyone who became a burden.  It was considered a loving act to give one’s life for the benefit of the group, so even the aged considered their death to be right, or ethical.

  The dividing line seems to be who would benefit from the act.  When a person desires particular circumstances for his or her own benefit, then that has the possibility of being unethical.  If the circumstance is desired for the good of someone else or the group as a whole, it is more likely to be ethical in nature.

The Addiction to Power

  It would be completely wrong and unfair to say that powerful people as a group are unethical.  However, it must be noted that too often power does corrupt.  It is easy to say that one should be content with their lives, but it is human to want what someone else has.  For most people, such jealousy has no ability to become abusive since the individual has no personal power over others.  For a person in a powerful position, however, abuse is often possible.  We have seen this demonstrated in jobs where there is control over others, such as guards have in a prison.  Luckily having control does not change most people, but if we are not very careful those who would change with power will seek out situations that give it to them.

  Surprisingly, it is often those with some power, but not lots of it, that seem to abuse their position or authority.  Often such things are merely annoying, but not dangerous.  However, our history has some very dramatic instances where power gone wild has resulted in death and destruction, sometimes for entire populations.

  It has been said that power draws others thirsty for it.  Perhaps this is why powerful people so often experience anxiety, stress, depression and unhappiness.  History has also shown that power can bring about immoral behavior in otherwise good people.  Who can say why this happens?  Many of our political leaders have demonstrated behavior that was not only unethical, but potentially destructive to their careers.  One must only turn on the nightly news to observe examples of those engaging in destructive behavior. 

  Why would a savvy, smart, ambitious person do things that might destroy them?  For some, there is the feeling that their power is so great that nothing can touch them.  People tend to surround themselves with others who validate their own feelings.  Someone who thought they could not be touched would choose friends who reinforced their opinion.

  For some, temptation is simply greater than their moral standing. Powerful people attract others who desire power.  In their desire to obtain power, special opportunities may be offered.  Those seeking power hope that, by giving special favors to the powerful, their own needs for power will be fulfilled.  Many who thirst for power will achieve it by trampling those in their way.  There is the saying: all that is needed for evil to triumph is for good people to do nothing.

  Those of us who have no position of power may imagine that power would enrich our lives.  This is generally not the case.  Powerful people are more likely to have heart attacks, and other physical ailments.  Of course, that may have more to do with the stress of their responsibility than with the actual power.  It is hard to know for sure.  Even aside from the physical ailments they experience, the mental stress is great.  Powerful people typically must “stay on top.”  Sometimes by whatever means available.  Powerful people often desire wealth since it is an avenue to obtaining power.  Because they have power, they are able to pursue wealth successfully.

  Ironically, history often shows a different view of who was actually powerful.  Who would have considered Ralph Nader powerful thirty years ago?  Yet today, industry certainly considers him to be powerful.  He has forced some very strong companies to change the way they do business.

  Several environmental and animal rights groups have also stretched some muscle in ways that no one imagined possible.  Usually, we think of powerful people as those who work for their own benefit, but that is not always true.

  Even Mother Teresa who never sought power, never sought wealth ended up being a powerful figure.  Corporate heads listened when she spoke.  Why was that?  Perhaps because the greatest form of power is the ability to persuade others or to affect how others view us.  Mother Teresa had that ability.

  It must be stressed that power and wealth are not always connected initially.  Wealth often comes as a result of power, however. Many wealthy people live long lives, often with little stress involved.  When power is not the goal, individuals are free to work as they choose with no regard for others who are drawn to power (avoiding all the conflict that brings).  Many wealthy people shield knowledge of it from others in order to avoid problems.  They live simply, driving modest cars, living in modest homes, and demonstrating lifestyles like most middle-America.  Those most likely to be concealing wealth earned it themselves.  There are many more self-made millionaires than most people would guess.  Often it was the result of years of hard work building up a business.  For these individuals, wealth was never the goal.  Power was never the goal.  Instead, they simply pursued a career choice that brought them pleasure.  Wealth merely happened to be a resulting factor.

Objective Morality

  Many philosophers and ethical writers believe morality is the evolution of continued discovery.  As we discover new things about our society and the world around us, we must draw continually new conclusions regarding ethics.  Fifty years ago, environmental issues were not considered.  As our society grew and progressed, these topics became an ethical issue.  Therefore, our society’s morality is, in many ways, linked to education. 

  Can a person be objective morally?  In some ways, we must be.  Otherwise, we would not be able to deal on a global basis with countries that do not share our views.  In other ways, we can never be.  Otherwise, we would be willing to tolerate another Adolf Hitler.  Seem confusing?  Ethics often are.

  It has been said that morals are the result of thoughtful and well educated people.  In many ways this is probably true.  One must be thoughtful or all the education possible in ethics will not make any difference.  On the other hand, no matter how thoughtful a person may be, without education they may be unable to fully understand an ethical issue.  Education is to ethics what research is to science.  Each is a necessary part of advancing theories and ultimately society.

  Education does not always bring agreement.  This is true in science and in ethics as well.  Education often has to do with the way in which facts are presented.  There was an exercise that was performed for the benefit of new insurance agents.  Two policies were compared in two different lights.  Under one comparison Plan A seemed the best choice; under the other comparison, Plan B was the obvious choice.  Neither policy changed during the two comparisons, but how the facts were related did change.  When agents saw the two presentations, they often felt confused and sometimes even annoyed.  How were they to know which to present to consumers if both were simultaneously displayed as best and worst?

  The point of the demonstration is true in many situations.  No one item is right for all people.  No one set of facts is right all the time either.  Each person and situation vary, and with those variations comes different applications of the same facts.  We believe it is wrong to steal, yet we would each steal if necessary to feed our hungry child.  We believe it is wrong to lie, but many people lied to protect Jews during the Holocaust.  We believe it is wrong to kill, yet we expect our policemen and women to kill if necessary in order to protect America’s citizens.  It all depends on how the facts are presented.

  Police officers are in an especially difficult situation.  If they must draw their gun and fire, the fact that they wear a badge is not protection from society’s view of the facts.  One part of society may feel they were justified and another part of society may feel they were not.  In addition to facing society’s opinion, they must deal with their own perceptions of morality and killing another person.  Soldiers in combat faced similar ethical conflicts.  Certainly, it is important that our police officers be well educated and ethical.  Some might say that the ethical training is especially important for officers.  Why?  Because an officer who is prejudiced, greedy, or looking for power is in a position to do great harm.  At the same time, an honest and well-meaning officer may find himself or herself unjustly treated because they judged the facts differently than a panel of judges who had time to consider all elements.  In the years to come, society will have to make some decisions: are tax dollars more important than the cost of hiring the best men and women?

  The previous illustration regarding police officers could be applied to any profession who has the ability to affect consumers.  An insurance agent who is uneducated is just as dangerous as an insurance agent who in unethical.  Although the motives may be different, the results for the consumer are not.

Avoiding Negativity

  Virtually every living thing will attempt to avoid harm.  People are perhaps the one exception.  Some people seem to seek out danger.  Even those that seek danger, however, probably try to avoid being personally harmed.

  Nature has installed in us several defenses to avoid harm: our eyelids instinctively close if something comes flying towards our face, we sneeze when our respiratory passages are irritated, our hand pulls back from a hot surface before we even consider the movement.  All of these things, plus more, are reflex actions built into our bodies.  Nature has a “survival sense.”  Even plants have demonstrated survival conditioning.  Many varieties protect themselves from water shortages, for example.

  There are other things that condition us towards certain behavior that is not a reflex.  A reward of food following a specific behavior might encourage us to repeat it (“When you finish your homework, you may have desert”).  On the other hand, a small shock would discourage the behavior (remember how people used to quit smoking?).  The food is called a reinforcer because it encourages a specific related behavior.  The shock would be called a negative reinforcer.  Both reinforcer and negative reinforcer activity is contingent upon the previous occurrence or stimuli.  This is nature’s way of educating us.

  The path ethical education takes is not too different from nature’s way.  Often the negative reinforcer is the reaction of our peers.  While it may not involve a hot surface, we still instinctively pull away when another person or group voices displeasure with our action.  If another person or group voices approval, it becomes a reinforcer.  As a child the reinforcement came from our parents and friends.  Their approval or disapproval meant a great deal.  There is a close tie to feelings of being loved and approval.  The confusion between love and approval has sent many people to the analyst’s couch.

  As we grow older, we don’t voice the idea that our peer’s approval has anything to do with love, but that doesn’t mean that it becomes any less important.  It is the rare person who does not want approval from others.  It may be less important to some than others, but it is still generally desired.  Of course, the most important need for approval involves those we seek love or approval from.

  Because approval (even when not voiced) is desired, ethics can be taught.  It is less likely to be taught in a classroom, however, and more likely to be taught in social circles.  It is important to note that just any group will not influence a person.  The group must be one that he or she wishes to participate in.  When the individual values the person or group, then he or she will be swayed by their views.

  This ability to influence has been used very successfully by many groups.  Some types of groups have even sought people who did not feel a sense of belonging anywhere else.  Since any person wants to belong some place, if that has not been fulfilled, they can be susceptible to a person or group that gives a sense of belonging.  That is, the individual can be influenced.  Youth gangs have especially capitalized on this need to belong.  If the child does not have a sense of worth and personal importance at home, in church or in school, they will seek it elsewhere.  Of course, children from loving homes have still been pulled into destructive situations, but without positive influences, the pull of destructive forces has a much greater chance.

  This brings us back to ethical standards becoming habits.  The child who has routinely followed a religious path will be less likely to suddenly veer from it.  It is not unusual for an adult to return to a religion they practiced as a child.  Although they may not realize it, returning to their childhood religion often regains a security they felt at that time.  Perhaps that is why parents so often feel strongly about teaching their children religion; it has the ability to lay a path for them in adulthood.

Who is the teacher?

  This chapter asked the question: can ethics be taught?  Perhaps the better question would have been: who is the teacher?  Where do we get our ethical training?

  Many people would be surprised to learn that they teach ethics to others every day.  Each of us gives to others, whether we realize it or not.  We, in turn, also receive from others every day.

  People who work with the public, such as insurance agents, see all kinds of people.  When they are with their clients it would probably be safe to say that they “put their best foot forward.”  I would be surprised to hear of any agent who treated their clients and potential clients rudely.  Surely, they would not last in the profession for any length of time.  Why, then, do we treat the store clerk, the telephone operator, or our children rudely?  Is it because we think these people are different than those who supply our professional income?

  As an educational provider, we are always surprised by the rude telephone calls we sometimes receive.  Perhaps the few agents who do this believe they are being assertive, but rudeness is never the same thing as assertiveness.  Sometimes rudeness simply ends up being humorous if the receiver can keep it from affecting them personally.  Perhaps fewer people would be rude if they realized how often they are laughed at.

  Rudeness can be comical to those watching (such as television sitcoms), but seldom is it humorous to the person who is the target.  Anger and rudeness are often companions.  Therefore, the victim of the verbal assault must deal with two emotions, both of which are unacceptable and illogical.  The target of this abuse is bound to feel drained emotionally by the end of the ordeal and all too often, nothing is accomplished by either person.

Are manners part of ethics?

  Most philosophers feel that ethics and manners are connected.  Since manners display a need to do what is right, the two have a common thread.  An ethical person would be aware that the person waiting on them at the store has feelings and insecurities.  Therefore, any action that brought about emotional pain would be unethical.

  It has become popular to display aggressiveness.  What many people fail to recognize is that aggressiveness is not always particularly successful!  The sweet old lady who smiles quietly at the clerk is much more likely to get her refund than the businessman who pounds the counter and demands to see the manager.  Generally, people want to help those that they like.  The counter-pounding man may get his refund, but the clerk will be unlikely to give him any additional service of any kind.  On the other hand, the same clerk may carry the packages to the car for the polite, little, old lady.  Which customer is really the smartest?

Ethical Investing

  Ethics is a subject that has more questions than answers.  Much of the basic ethical questions are touched by factors that vary from culture to culture, religion to religion, and even by factors of self-interest.

  Ethics and money are seldom linked.  In some circles, it might be argued that money and ethics are simply incompatible, but we do not believe this to be true.  In fact, it might even be more important to inject ethics into investing since money is often a factor in unethical behavior.  Many people are more aware today of the dilemma of profiting from enterprises whose goals, methods, or products are inconsistent with personal ethics.

  Injecting ethics into investing goes farther than simply avoiding those investments, which are openly and obviously against personal views.  Ethical investing means that one must investigate companies and products so that both positive and profitable choices may be made.

  To link an individual’s money (investments) and personal code of ethics together, some assumptions must be made:

1. Every investment has some sort of ethical dimension,

2. Investors can (and perhaps should) apply their ethical standards to their own investment strategies, and

3. Investors who apply their ethical criteria may even be more successful than those who do not.

  The first and second assumptions cannot be proven since they are philosophical in nature, but the third assumption can be based on fact or available data.

  Many investors and investment counselors have thought that anything unrelated to financial a criterion that limits investment choices must also limit the available return.  Actually, this is not true.  Many investment professionals have begun reporting that investments made according to one's ethical preferences are actually doing significantly better than the average account.  Joan Bavaria, president of Franklin Research and Development Corporation, stated: "I started running money along ethical guidelines more out of personal interest than in response to requests, although there was that too.  After about two years, I realized that my ethical accounts were doing significantly better than our average account."  U.S. Trust Company of Boston cites similar experiences, as do other investment companies.

Investing in Familiar Products

  Investors are most comfortable investing in companies and products that are familiar to them, which is not surprising.  Confidence is easier when the products we use are also where we place our money.  People who advise clients on financial matters have long experienced people who say such things as "I don't like that company and I don't want to invest there" or "find me something in the computer industry" or whatever industry the investor is familiar with.  Few people considered this strange, yet when ethical investing began to develop, there was a certain amount of resistance.

  One of the most widely accepted approaches to investing is what might be called the positive approach.  Put your money in companies you know and understand.  Many Wall Street companies choose to deal in specific types of stock selection, for example, and no one thought that was odd, yet when ethical investing began to develop, it was met with many vehemently negative responses.  Part of this negativity was due to the conception that it would add many hours of work for the professionals charged with making the investment selections.  As one top trust officer stated: "Don't expect me to run around looking for termites in the woodpile."

  It can, in fact, add hours of work if data is not readily available.  The ethical investor must determine which companies are engaging in activities that he or she does not agree with, and must also identity those companies that are complying with their beliefs.  In short, it depends on available information.  Some money managers simply do not wish to step outside of their comfort zone to see what information is available.  There is actually more information available than many of these money managers are aware of.  Sometimes a money manager is simply not open to new avenues of investing, having become overly familiar with what they are already doing (and feeling comfortable with what they are doing).

Searching for Compatible Companies

  Many companies are already strongly into their own ethical investing.  If the investor's views correspond, investing might be very easy.  Morality in Media, for instance, focuses on companies that sponsor sex-laden TV shows.  By looking at the information this organization has compiled, an investor could choose who to avoid and who to invest in.  There are groups that monitor just about everything.

  The key to investing as your ethics dictate is finding those companies whose views match your own.  It is often easier to find those companies whose views are opposite (which does at least tell you who to avoid).  Typically, the only thing that is printed in investment news magazines or papers have to do with investment performance, but not necessarily where those investments are located.  It should be noted that ethical investing is a very personal decision, and as such, there is no right or wrong answer.  It is a personal decision based on personal beliefs.  It is interesting to note that when it is possible to show a client how to invest in things that match their ethical beliefs, they are much more likely to invest.

  Money is a deeply personal subject.  Our finances are so personal that few people are willing to share the details with anyone other than their accountant.  Even family members often know very little about each other's financial matters.  Our finances are, in many ways, a reflection of who we are.  As such, we are very protective of our decisions.  Ethical investing allows us to promote that personal reflection in a way that makes us feel good about ourselves.  The good news is that it also allows us to have a very favorable return at the same time if good judgment is used.

Personal Involvement

Nothing happens unless the clients get involved personally in their own money management. Encourage our clients to make their own money decisions?  Absolutely!  Clients who understand and agree with their investing decisions become lifelong accounts and are the least likely to sue (because they made their own decisions).

  Think of the word invest.  It is used in a variety of ways which often projects personal involvement.  "I invested four years in my education."  "I've invested my entire life in this goal."  The word can mean something far more than a simple money transaction. 

  Investment options are far broader than many people realize.  Of course, there are the simpler investments such as passbook savings accounts, but there may also be much more complicated investment structures.  Even where one chooses to have a savings account can impact others since many banks loan specifically for certain types of people and development.

  Not long ago few investment counselors were interested in ethical investing.  Even now it may be difficult finding counselors who are willing to invest specifically how the client desires.  Increasingly more firms are willing, however, to do the type of investigation required to invest according to an individual’s ethics.  Even so, agents must still do a certain amount of their own investigation in many cases.  Clients may also need to do some personal investigation.  Perhaps his or her counselor is not able to put the amount of time into the process as is necessary, or perhaps the advisor charges extra for that type of work.  It must also be pointed out that no matter who advises the investor, the investor is ultimately responsible for making the final decisions on ethical investments.

  If you are the investment counselor, your clients may not fully accept that approach.  We know that counselors can be sued for negligence, so you will want to document your homework.  Ethical investing tends to emphasize quality and that is often the goal of the investor as well as complying with their personal standards. Quality is stressed whether it happens to be in annuities, life insurance, stocks, or bonds.  Once you have discovered a financial institution that gives both quality and investment return, you are likely to use the institution over and over again, so your time in finding it will eventually be well rewarded.

Forcing Change through Investing

  General investing was seldom considered from an ethical standpoint in the past, but that has changed.  Whether it is a refusal to buy what is termed “blood diamonds” or a refusal to invest in a country considered oppressive, money talks.

 Although money is sometimes considered immoral it can actually do more to persuade people and countries than almost anything else.  South Africa saw that some years ago when investment capital was withheld to force social change.  Since nearly everything we do has some type of following consequences, why not allow investing to make a statement?  Why not withhold money from companies and corporations that follow practices we find unethical?  Why not invest our money in companies we agree with?

  Initially only a small group of professional money managers offered ethical investing opportunities.  The majority of money managers initially felt that it would be too time consuming to research companies from an ethical standpoint.  They are rapidly changing that train of thought.

  It was also initially believed that following an ethical trend of investing would mean a lower rate of return (a lower interest rate).  That too has not turned out to be the case.  In many instances, in fact, ethical investing has actually given a better return.  That probably explains why more and more money managers are willing to deal with investing from an ethical standpoint.

Socially Responsible Investing (SRI)

  What exactly do we mean by ethical investing?  Often called socially responsible investing (SRI), it means financially investing where one’s heart is; investing in the things the investor believes in and avoiding those things he or she opposes.

  It should be noted that few investment vehicles would satisfy a person completely.  Especially if the company is large, there are likely to be pockets of business that do not conform to one’s ethical ruler. However, it is possible to invest in companies that primarily follow what one believes in.

  Ethical investors must usually do more investigating before investing.  Perhaps this is the very reason their investments do better overall.  Any investor would be foolish to invest in a company that seems to be poorly managed, whether the company is ethical or not.  By doing the extra research that ethical investors tend to do, they are more likely to uncover poorly managed companies.

  Investors can either do the research themselves or hire a professional money manager who has done, or is willing to do, the research.  Any investor seeking a financial manager needs to be sure they have found a professional who understands their goals.  A manager who is simply agreeing in order to get the business will not be suitable.  Ideally, the manager should have similar feelings so that he or she understands the investor's position.  Understand that the money manager does not have to agree on the ethical issues themselves, but he or she must feel that ethical investing is desirable.

The Avoidance Investor

  The most common approach to ethical investing is the avoidance approach.  Under this method, investors merely avoid putting their money into a company or corporation that practices what they consider to be unethical standards.  What those unethical practices are can be anything from a lack of necessary action to an intentional action.

  Investment often counselors prefer to work from the avoidance approach because it takes up less of their time.  It is easier to identify undesirable companies (versus researching those companies that participate in approved areas).  Simply, the investor states those industries or companies that they wish to avoid for whatever reasons.  Then the investment advisor scans the current investments for any undesirable industries or companies.

  There are two ways to choose companies when avoidance investing:

1. Identify those companies participating in undesirable investing or hiring practices and avoid them entirely, or

2. Identify those companies practicing the desirable business practices and invest actively in them.

  For example, if the issue is minority hiring, the investor could avoid companies that appear to try to hire only whites, or he could seek out companies that actively recruit minorities.  In the first situation, the investor is avoiding companies by what they do not do.  In the second, he is seeking companies by what they do.  If the investor actually employs both strategies, he will avoid the middle of the road companies: ones that do not avoid hiring minorities, but at the same time does not seek them out either.  Avoidance investing is a passive form of investing because it does not seek to change the companies, merely to avoid allowing them the use of the investor’s money.  In effect, the investor is saying: “Not with my money, you don’t.” 

  In most cases, however, the avoidance technique is not used to call attention to the activities of any given industry or firm, but rather a refusal to profit from their activities.  In fact, the avoidance technique rarely brings forth any public awareness.  Avoiding certain industries or products is certainly the easiest way to approach ethical investing.  It is simply easier to find those companies that do things wrong than it is to find companies that do things right.

  It must be noted that the avoidance technique is not fail-proof.  Since little research is involved in the avoidance technique, the investor may still find themselves investing unwittingly in companies that go against their ethical desires.  In addition, research is often what brings about the most satisfying financial results.  Of course, the sums that most of us are able to invest will not affect any company one way or the other.  We do not have the power to bring about any real change in the industry.  As we previously stated, it is more a matter of not profiting from those industries that offend us.  Also, the avoidance technique only says what you will not invest in.  It does not give any direction to companies that you will invest in.

Positive Investing Approach

  The positive investment approach is generally used in conjunction with the Avoidance Technique.  In other words, not only are some companies and products avoided, but also others are actively sought out.  Those companies actively sought out are generally industries or products that enhance the quality of life in some way.  The quality of the goods and services of these companies are high, and the companies practice good relations with their workers and the surrounding communities.  There is the assumption that a company or industry that promotes good work relations and produces a high quality product or service is likely to produce a superior investment return.  In many, many cases, this assumption is correct.

  One might ask, "Is not investing for financial gain a goal of self-interest?"  Yes, it is and there is nothing wrong with investing for the goal of a financial gain.  It would be foolish to do otherwise.  Ethics can still be a part of a financial gain and should be.  A degree of ethical self-interest is necessary for both our culture and our political position to continue.  There is no reason why one cannot benefit themselves and others at the same time.  In fact, many businesses have been built on the concept that what is good for the consumer can also be good for the business.  Sears, Roebuck & Company was built on this philosophy.  The company helped farmers adopt improved agricultural methods and set up 4-H clubs to teach farming techniques.  The end result was improved agricultural methods such as contour farming and education for young people.  At the same time, Sears grew.

  By living one's life according to their own beliefs while taking a positive investment approach, one can demonstrate what is important to them while still securing their financial future.  Choosing investments according to benevolent self-interest simply makes sense because the investor will pay more attention to investments that reflect their own beliefs.  Investment professionals have long recognized that informed and careful investors do better.

  It should be recognized that a company or product's merits do change.  What seemed right to buy at the time may not always remain "right."  Therefore, that means not only buying in an ethical fashion, but also selling when it seems right to do so.  Ethical merits of investments may change just as financial merits may also change and, of course, both must be considered.

  The National Council of Churches has put together these criteria for their investment needs:

1. Do the products meet government standards?

2. Is their labeling adequate and easily understood?

3. Will the products last for a reasonable amount of time?

4. Does the company actively recruit women and minorities?

5. Is the company pioneering safe alternative energy sources or studying ways to reduce the demand for natural resources?

6. Is the company researching the development of new products or means of production that will enhance the quality of life?

  While this list of criteria for investments may not exactly match each person's concerns, it is a good starting point.  It also points out another need for the individual investor.  Each person must know precisely what he or she does or does not want in his or her investments.  An investment counselor cannot adequately help them meet their goals unless he or she has a specific set of rules to go by.

  Ethical investing means making decisions.  Sometimes the choices to be made are not easy ones.  A company may have both good and bad points.  For example, a company might engage in weaponry contracts, but at the same time be promoting housing for low-income people.  A company may be considered environmentally irresponsible, but at the same time be campaigning for equal opportunities in the workplace.

  There is no getting around it.  When the Positive Approach is taken to ethical investing and all the research is in, seldom is a company totally black or white.  Most major companies are diversified and that means you might agree with some aspects, but disagree with others.  As a result, the investor must put all the pieces together and see what aspects outweigh others for the final determination.  These decisions will actually lend themselves to a better investment portfolio since the investor will be well aware of what the investment entails.

The Activist Investor

  The activist investor would use both Avoidance investing and positive investing.  They would avoid the companies that obviously do not practice their desired morals AND seek out companies that do.  Activists want social change.  They want companies to see issues the way they see them.  When companies refuse to consider their views, activist investors may even be willing to force change, where possible.

  Some investors want to do more than avoid bad or unethical companies and invest in good or ethical ones.  Their desire is to bridge changes bringing the perceived bad over to the perceived good.  Therefore, they take the activist approach.

  This is probably not realistic for many investors for varied reasons.  First of all, the average investor will not be able to invest enough money into the firm.  Without a large voting block, the opportunities to bridge change will be limited.  Even so, there are many ways to bring about change in any given industry.  Time given is often a powerful tool.  People with little financial support can bring about great changes if they are willing to put the time and energy into the types of campaigning necessary.

  The Activist investor concentrates on corporations that influence national policy on issues they are concerned about.  That might be a company that already agrees with their views, or even companies that do not.  They devote their time and energy to bringing about whatever change they feel is necessary.

  The Activist starts from one basic fact: shareholders own the company.  That means that the management supposedly works for them.  At least once per year, shareholders have the right to elect directors and to propose and vote on resolutions relating to corporate policy.  If the owners fail to exercise their power to direct corporate policy, they waive a powerful means for change.  It is likely that few shareholders actually do exercise this right.

  Corporations operate on a one-share, one-vote system.  In other words, if an investor holds 10,000 shares, he or she then has 10,000 votes.  It should be realized, however, that thousands or millions of shares may exist.  10,000 shares may not influence the decisions of the corporation in the least if the other 300,000,000 shares vote differently.  Even so, it is possible for relatively small shareholders to make their voices heard and maybe even sway policy to some degree.  Small organizations have used shareholder resolutions and participation at annual meetings as mechanisms to educate and open up company policies.

Gadflies

  Such small shareholders who actively pursue change are often referred to as gadflies. The dictionary defines gadflies as insects that bite and annoy livestock.  The critics of the activists claim that, while they are ineffective, they are an expensive annoyance.  Whether or not the activist investor is ineffective may be debatable, but it is true that over the last twenty years, corporations have spent millions of dollars on lobbying, lawsuits, and regulatory actions attempting to limit the so-called gadflies' influence, so apparently, they have successfully annoyed someone.

  Often these so-called gadflies have been most effective in simply showing others in the corporation how to effectively influence company policies.  Usually, this is aimed at much more powerful investors who are often referred to as institutions.  They include banks, trust companies, union and corporate pension funds, mutual funds, money market mutual funds, college endowment funds, and other poolings of money.  In other words, institutions are typically made up of many people who have put their money together to form one major voting bloc.

  Because of the institutions size, they often are able to have great power when it comes to influencing corporate policies.  In 1980 private pension funds alone held over $400 billion.  By 2010, they totaled more than $17.9 trillion.  For 2021, it jumped up to around $40 trillion US dollars. As you might imagine, if such a large institution wants to know what a corporation's equal employment policy is, that corporation does respond.

  Simply put, gadflies are often able to teach powerful institutions that corporate management does not always know what is best. Until corporate gadflies demonstrated this, institutions tended to automatically vote with existing management.  It has become known in the past two decades that such support can no longer be taken for granted.

  Initially, gadflies were not taken too seriously. They were, to be sure, an annoyance, but many of the major corporations did not feel that they would ever gain enough power to greatly influence policies. However, the gadflies realized something that the corporations apparently did not. Institutions are made up of people and people can be influenced. In many cases, institutions listened because they were made up of people who invested in them.  If a measure of their investors were concerned, then that institution also became concerned.

  In recent years, we have seen corporations themselves become activists.  Sometimes it might be for a self-interest directly related to their business, but other times the corporation may be acting for what they perceive to be the good of the surrounding community.  Often corporations are taking a role in referenda, and this is often troubling to smaller groups who have a stake in the outcome since corporations often have much more financial support.

  More troubling than corporate participation in referenda, however, is the increasing power of corporate political action committees, often called PACs.  Their powerful emergence is one of the great unintended consequences of the effort to clean up campaign financing in the wake of the Nixon debacle.  It was intended to allow corporations a means of participating in elections, but what no one foresaw was the enormous amount of money corporations were willing to dump into the elections of politicians.

  There are many ways that individual investors can affect change. As we saw some years ago in South Africa, money is a powerful tool.  Investors who own shares use the power of their vote to create change. Pioneered by Ralph Nader, investors buy shares of stock in companies whose business policies are not consistent with the views of the investor. Each share of stock is allowed a vote, so one share of stock provides one vote; five shares of stock would allow five votes and so on. Each shareholder has the opportunity at least once a year to elect directors to the company’s board and vote on policy resolutions.  Corporations are required by law to hold annual meetings for this purpose. Under specific conditions, the shareholders may also propose resolutions, which must then be voted on.

  It was the ability to propose resolutions that the activist investors saw as their avenue to change.  The companies themselves often did not appreciate these proposed resolutions, because it brought the company bad publicity in many cases. No company wants the public to focus on bad environmental issues or animal testing, for example.  Activist shareholders pool their share votes to meet eligibility standards enabling them to propose resolutions (in 1983 the corporate community persuaded the Securities and Exchange Commission to restrict access to the resolution process).

  Most votes are completed by proxy, which is a sort of absentee ballot. It allows shareholders to vote without actually attending the meeting. Most shareholders tend to vote with the recommendations of the board of directors. Their recommendations accompany the ballots that are sent out. Therefore, change by resolution vote is certainly no guarantee that it will pass. However, if the shareholders take the time to actually read the resolutions, it does bring to surface the issues desired by the activist investors. Even if the resolution does not appear to have any chance of passing, it can embarrass the company into changing their policies.

  Many activist investors work with progressive organizations whose causes are similar to theirs. These shareholders propose resolutions for the organizations.  This concept is not new. In 1987 People for the Ethical Treatment of Animals (PETA) worked with shareholders of some of the major cosmetic companies, including Gillette, Bristol-Myers Squibb, Schering-Plough, and Johnson & Johnson. The aim of the resolutions was to eliminate animal testing. The publicity that the proposed resolutions generated did cause some changes, although they were slow in actually implementing them. In 1990 Colgate-Palmolive became the first company to allow data to become public regarding their animal testing.

Ethical Investing for Profit

  It is unlikely that even activist investors do not care about the return on their money. While top returns may not be their main priority, activist investors still want to know that they will have financial security in their later years. It is, as we said, possible to invest ethically and still make adequate returns.

Investing in Small Companies

  Small companies often offer the promise of the best returns.  However, small companies also tend to carry greater risks.  In most investments potential of higher returns also means higher investment risk.

  Small companies, simply because they are small, tend to be more in line ethically than larger companies.  Activist investors often favor small companies because they are part of local communities.  Anytime a company is involved with the community, it is more likely to reflect the local goals.  Also, small companies tend to be more oriented to a single purpose.  This allows its business practices to be purer.  Because the company is small, there has been little or no diversification.  Therefore, the ethical direction of the small company is easier to determine.  In addition, most new jobs are currently created by small companies rather than large ones.  As a result, investing in small companies promotes the local community through employment.  Finally, most new American products and services originate with smaller companies.

  Because smaller companies so often are the ones who promote new ideas and services, they are also the most likely to experience rapid growth, which is good for the investor.  Of course, it must also be recognized that rapid growth is not guaranteed.  If a financial crunch occurs, a smaller business is less likely to weather it.  Larger companies have more financial resources and more diversification, which cushions them in bad times.

  From an ethical standpoint, there is another factor to consider.  Smaller companies are more likely to be bought out by bigger companies.  The very reason the ethical investor purchased the stock could be wiped out if purchased by a large company. In early 1990, Carme, who produced only cruelty-free products, was bought by International Research and Development Corporation. They do animal testing for multiple companies. Investors who had purchased stock in Carme simply because they did not test on animals suddenly owned stock in a company that does.

  Some companies, large and small, are dedicated to specific goals, some of which may match those of the investor.  Sometimes there are even exceptional companies to choose from.  Ben & Jerry’s Homemade Ice Cream is an example of this.  Created because of a love for ice cream, their goals were personal.  Besides making good ice cream, they wanted to have a certain atmosphere about their company. They wanted to be the most charitable company, they wanted to be the best employers in Vermont, they wanted to be instrumental in social change, and they wanted to have a “fun” company. One of their recipients of “1,000 Pints of Light” campaign was Dr. Patch Adams of the Gesundheit Institute, who was played by Robin Williams in a 1998 movie.

  Mainstream investors and mainstream money managers primarily rely on numbers. This is not bad, of course, since the numbers give an indication of future performance. However, numbers in themselves are only part of an investment’s picture. Therefore, investors who look beyond the numbers at ethical factors they consider important will end up with a fuller look at their investment.  Because many companies have more than one business line, the investor is likely to find both good and bad in the companies they investigate.  This is especially true of larger companies.  Socially responsible investors will have to make some personal decisions.  They may have to do some prioritizing of their own: which is more important?  Cruelty-free products or avoiding companies who make war products?  The environment or minority hiring?  For some investors, the decisions will be few because their goals are focused on one or two issues.  For others, it will be very difficult because their goals are so broad and multifaceted.

Investing for the Long Term

  Most investments are intended to be long term.  The exceptions would include Certificates of Deposit and money market accounts.  Ethical investing is also a long-term investment, unless some stock or bond changes hands or the company changes focus.  Even then, the funds themselves are earmarked for the long term.  Many people move their money among stocks and mutual funds routinely, so there is no reason not to do so with ethical investments as well.  However, excessive movement is seldom good.

Early Ethical Investment Trends

  Ethical investing is not new.  Although there was not a wide-spread desire to invest ethically twenty or thirty years ago, ethical investing has occurred as far back as the early 1900s.  The early ethical investors were primarily concerned with certain types of sin, namely alcohol, tobacco, pornography, and gambling.  Back then, their definitions may not have been the same as ours, but their desire to be true to their own convictions still existed.

  Ethical investing primarily grew from the sixties and seventies.  The Vietnam War sparked many socially responsible investors.  Their opposition to the war was so intense that they refused to allow their money to support it in any way.  Students even demanded that their universities pull funds from any war-associated company.

  Today there are all types of investments that meet the needs of the ethical investor.  Virtually any type of investment can be screened to meet specific criteria.

Where does one begin?

  As we know, there are multiple avenues for investing.  Each has its proper place, but no one vehicle is right for everyone and every situation.  An ethical criterion does apply, however, to every type of investment vehicle.  Some types of investments are fairly common and, therefore, known to most people.  That would include such things as bank accounts of the saving variety, stocks, money market funds and insurance investments.  The fact that most people have heard of them does not mean that they are understood.  When you ask a client "Have you heard about annuities?" and he or she nods in the affirmative, do not think that the client also has an understanding of them.

  There are some basic elements that always need to be explained.  If you are worried that you might offend a knowledgeable person, simply state something to the effect of "If I am repeating what you already know, please excuse me.  I want to be sure that I am doing the best job possible and this is part of that job."

  Because investment tools are so numerous and diverse, investors tend to refer to them as vehicles.  A vehicle simply means any medium for producing effects.  In this context, the desired effects are profits.  So, a vehicle is an investment, which produces some effect, hopefully a profit.  Understand that the effect could also be a loss, although that is not the desired effect.

  Some types of vehicles would pose some problems for the ethical investor.  For example, an investor who is an environmentalist probably would find few oil investments in which he or she would feel comfortable.

Two Basic Categories of Investments

  There are two basic categories of investments: debt and equity.  Either a loan is made to a company or a division of government (debt) or the investor buys a part of a company (equity).

  If a debt vehicle is purchased, such as bonds, commercial paper or bank notes, a loan is made.  If equity is bought, such as common stock or shares, part ownership in a corporation is made.  The value of the interest depends upon the company's success.  If the company is successful, the investor has a right to share in the profits, but only after debt holders receive their interest and principal payments.  Unlike debt, the investor's ownership interest entitles them to a voice in the company's affairs (he or she could become a gadfly!).

  The terms capital gains and income describe how one makes money on the investments.  If the investor sells for a profit, the difference between what is paid and what is received at the time of sale (after deducting brokers' commissions) is a capital gain.  There is a formula for calculating a capital gain or loss.  It is:

Sale price minus purchase price,

minus commissions on both the purchase and the sale

equals either a capital gain or a loss

(depending upon the final figure).

  Any interest or dividends received are also ordinary income.  You can get both income and capital gains from many, but not all investments.

Know Thyself

  Most of us have probably heard the saying "know thyself."  When it comes to ethical investing, this certainly applies.  No matter how profitable a company may be, it must fit the individual's needs if ethics are to be part of their investment goal.

  Imagine this scenario:

  Maggie wants to become an ethical investor.  She has read a recent magazine article on the concept and was greatly impressed.  She calls George, her investment advisor.

  Maggie:  "George, I am so excited about an article I just read.  It concerned ethical investing.  Have you ever heard of it?"

  George:  "Yes.  As a matter of fact, I have several clients who do just that.  What type of investments did you have in mind?"

  Maggie:  "I just told you.  Ethical investing."

  George:  "Yes, ethical investing, but what type of investments are you considering?"

  Maggie:  "I don't know what you mean.  Isn't there a division on ethical investing?"

  George:  "I have to know what your ethics are, Maggie.  Otherwise, there is no way that I can help you.  Do you want to work for the environment, for animal rights, for the poor, or something else?  You might even have several goals that we can work with.  In fact, most of my ethical investors have two or three areas that they approve of."

  Maggie:  "Look, the reason I went to you is so that you could guide me.  I don't see why this is becoming so complicated.  Just put me into some ethical investments."

  As you can see, Maggie has no real concept of what ethical investing is.  The only course George can take is ask a few basic questions and then try to do the best he can since Maggie really is not interested in becoming a true ethical investor.  It is likely that she merely likes the concept of it, but is not actually dedicated to the goal of ethical investing.  Maggie has not defined her personal investment goals so she cannot actively participate in ethical investing.

  To work with ethical investing, it is necessary to know some basic concepts.  The two most common investment goals are growth and income. 

  Growth describes investments held for their appreciation in value rather than the income that might be produced.  Investors do not expect to profit from this type of investment until it is sold at which time a profit will hopefully be realized.  A growth investment is a long-term commitment in most cases.

  An investment intended for income, on the other hand, is generally something that produces income on a regular basis, often monthly.  It may also produce a profit when sold, but that was not the primary aim.  Income investments tend to produce smaller profits when sold than would a growth investment.  Most investors tend to seek one or more of each type of investment rather than limit themselves to one or the other.  As with so many things in life, balance tends to be the key to successful investing.

Investment Portfolios

  A portfolio holds all of the investor’s liquid assets.  Liquid assets are those that may be easily turned into cash.  Liquid assets might include such things as cash, stocks, bonds, money market and mutual fund shares.  Non-liquid assets include such things as the investor's home, pension plans, antiques, and fine art.  Some types of insurance products may also be included.  Non-liquid assets play a direct role in how liquid assets fit into one's portfolio.

  A portfolio is strongly influenced (or should be) by the investor's age.  A person who is still in their prime earning years will invest differently than a person who is nearing retirement.

  The vast majority of investors do not have any specific pattern of investing.  How they invest is often determined by who happens to ring their doorbell.  For the ethical investor, this method simply will not work.  It is impossible to achieve an ethical investing goal by making rash investing decisions.  Ethical investing involves developing a financial strategy that fits into the individual’s ethical personality and goals.  Sometimes such an investor actually seeks an advisor who shares similar sets of ethical values.

Appraising Oneself

  It must be noted that being an ethical investor is more difficult than merely being a financial investor.   Certainly, the ethical investor also intends to do well financially, but not by sacrificing their beliefs.  To be an ethical investor, one must be focused and disciplined in thought and action.  Individuals, such as Maggie, do not possess the nature or personality for such investing because they rely upon someone else to make their investing decisions for them.

  For those who like the idea of ethical investing and are willing to investigate the concept, there are some questions that need to be considered:

1. What is the investor’s appraisal of themselves as ethical investors?  Will that appraisal affect the way in which he or she wants to manage their personal portfolio?

2. What does the investor need from his or her assets in both the short- and long-term range?

3. What is the starting point?  Whether or not the investor has investment experience might impact how they invest currently.

  Appraising oneself may not be an easy process, but it is worthwhile.  It means the investor must spend some time thinking about who he or she is, their current and future financial needs, and their environment.  It generally helps the investment adviser to have the goals stated on paper.  Seeing them in writing also helps the investor to organize his or her thoughts and recognize what can and cannot be achieved.

  Of course, the first thing to determine is which ethical goals are important to the investor.  These should be prioritized since it may not always be possible to consider all ethical goals.  Besides ethical goals, consider also ethical objections.  These are often different.  For example, an individual may have a goal of helping the hungry, but may object to using animals in product testing.  Both may be factored into your investing, but to do so, these goals and objections must be recognized and prioritized into investing strategies.  The more clearly the investor is able to state both goals and objections, the more likely he or she is to find investments that satisfy their ethical desires.

  Once goals and objectives are clarified, the investor must consider his or her financial resources.  He or she cannot simply consider where previous investments have been made, such as stocks or money market funds; all resources need to be identified.  Even such things as where the investor lives can be a reflection of ethical investing strategies.  For example, those who live by the ocean may want to invest in companies that impact the water and marine life.

  Investors that want to manage their own portfolios must consider how much time he or she has since poor management can adversely affect investments.  Management must have a certain amount of time if it is to be done right.  This time element is precisely why many investors prefer to hire professionals.

  Perhaps just as important as the time element is one’s emotional ability to handle investments.  Personalities differ and some people simply do not have the emotional personality for investment management.  Investments have ups and downs.  If the financial "downs" of the investments will result in stress, then it is probably not a wise idea to be their own manager.

  The investor’s emotional personality may also need to be considered before jumping into any type of investment.  If he or she is not comfortable with stocks, for example, then perhaps they should be avoided entirely.  However, the investor must realize that to be a truly ethical investor, some amount of personal involvement is necessary.

  Once the investor has zeroed in on his or her investing goals, worked through a self-appraisal and made a list of short-, medium-, and long-range goals, the investor must organize those goals chronologically according to when he or she expects their portfolio to produce a given result; even ethical investors can expect to have financial success in their investing.  By making a chronological chart, the investor will be better able to determine which investments were right and which need to be reevaluated.

Considering Current Financial Status

  Nearly all investors must consider their current earnings in their investment projections.  Few of us are lucky enough to simply have a large amount of money to work with without consideration as to current living costs.  Several things must usually be considered: estimated current earnings, job security, effects of the national economy, variable-rate mortgages (if applicable to the situation), and possible recessions in the investor’s work field.  There may be other factors that would apply specifically to the situation while some of those listed may not apply.

  Immediate living needs must always be considered.  It is not feasible to invest to the point that the investor is not able to pay current obligations.  Look at several things in the current situation.  Will he or she need college funds for their children soon?  Is the investor considering buying a first home or trading up from a current home?  Will the investor soon be having children (taking away a second income)?  Is the income tax bracket going to be going up this year or next?  Whatever current needs are, or may soon be, must be considered.

Future Financial Concerns

  Future concerns must be considered when investing.  Such things as retirement income, college educations for the wage-earner or family members, expected medical costs and other factors must all play a part in the investment goals.  Of course, it is necessary to know where the investor is now financially in order to evaluate where he or she might be in the future.  We have all known someone who had grand retirement plans, but had no idea how those plans were going to be realized.  If you question these people, they often become defensive or vague.  In other words, they do not have plans, but rather dreams. All of us need dreams in our lives.  In fact, dreams are often the first step to realized goals.  Many of our great leaders and educators began with only a dream.  For a dream to materialize, however, action must at some point begin.  If action never begins, a dream will remain just that - a dream.

  Our point is simple; planning is absolutely necessary, but actions must follow the plan laid out.  Evaluate where one is now.  Be precise.  This evaluation can end up being a lot of work, but it is necessary work.  List all liquid assets and be sure to include everything.  Make note where each asset is located.  Also list all non-liquid assets and note what and where they are.  Make a note of the percentage of each.  If most assets are liquid, draw up the portfolio management plan and begin investing as the investor ethically desires.  If much of the assets are non-liquid, it may take more work and be more difficult to begin ethical investing.  This might especially be true if much of the non-liquid assets are in areas the investor does not desire to remain in.

  It is likely that the initial investing did not have an ethical angle to it.  Therefore, the investor did not consider whether or not he or she agreed ethically with the types of investments purchased.  For example, suppose the investor bought his home because he loved its features and he could afford to live in that locale.  He did not consider if the neighborhood reflected his ethical views; chances are he had no idea what type of views existed in the neighborhood.  Now that he has lived there, he realizes that most of the neighbors do not share his opinions on minorities and the investor is distressed that there is bigotry in his neighborhood.   An individual’s home is one of the biggest investments anyone makes so to be a truly ethical investor, where one lives must be part of ethical considerations.  There are several options.  The investor may sell his home and buy in an integrated neighborhood, or if he wants to remain in his home, the investor may become active in integrating his present neighborhood.  He might also choose to rent out his home and live elsewhere until the area becomes more in line with his ethical opinions.

  Anytime someone moves into ethical investing, there will be several such decisions regarding previous investments.  Of course, if the investor is just now beginning to invest (starting out fresh), it will be much easier to tailor the investments to current desires.  We say "current" desires, because, as the investor matures, it is likely that his or her investing desires will change from one set of ethical requirements to another or to shades of the initial desires.

  Some of the current assets may not be in the investor’s control.  Even if this is the case, they must still be listed when making the asset inventory.  In some situations, even if there is no direct control of the asset, the investor may still be able to voice his or her opinions and preferences.  If he or she is a beneficiary of a trust, for example, it is possible that the trustees might heed his or her desires and at least avoid some types of investments that the investor feels are objectionable.

  If the investor plans to manage his or her own portfolio, it is wise to ask for advice from others such as a tax accountant or estate professional.  Even if a fee must be paid for such advice, it is often well worth the money spent.  Tax professionals are especially valuable because they may be able to guide the individual in directions that he or she did not even consider.

Two Portfolio Constants: Change & Deliberateness

  Realize that portfolio management has two constants, one of them being change.  The company invested in today may change its business philosophy tomorrow, thus no longer fitting into the desired ethical requirement.  The second constant of a portfolio management is deliberateness, which is a characteristic that must be developed.  Many words could be used in place of deliberateness; dedication would also work well.  The point is the investor must stick to the goal of investing regularly in whatever fields are desired.  For millions of people, investing (which is saving) never happens because they quit as soon as it becomes a little bit hard.  When there is no money for a special vacation, they quit saving.  Of course, they always intend to resume their investing, but usually they never do.  The hardest part is always staying dedicated to the goal.  It might mean occasionally giving up something the investor would like to do or like to have.  In the end, of course, it will all have been worth it.  Even so, it is hard for a 30-year-old to stick to the goal of saving for retirement; especially when there are so many material things he or she would like to have today.  Along this line, investors must avoid the traps of "get rich quick" schemes.  Once a pot of gold is partially built up, there will be many who are anxious to be the investor’s "best friend."

  This brings us to another point.  Part of the reason so many people fail at saving is because they do not give themselves small goals to reach along the way.  Everyone needs an occasional reward for his or her hard work.  By building in smaller goals that are reached on a regular basis, long-term goals may be easier to stick to.  No matter how noble a goal, we all need encouragement.

  Once an individual has become a dedicated investor (which is a dedicated saver), he or she will likely be adding to the portfolio from time to time and the investor may be using the same formula over and over again.  Each time additional funds are moved into an investment anything that might change the circumstances should be considered.  This would include the economy, job security, and other factors that might make it necessary to change an investing pattern from time to time.  It is always necessary to remain flexible.  Not only might company policies change that would affect how the investor looks at them from an ethical standpoint, but immediate circumstances might also affect investment patterns.  If job security is not certain, for instance, rather than lock money up in an investment, it might make more sense to put the additional savings into an accessible account as a deeper cushion against an uncertain future.

  We need to emphasize a very important point here.  We have been talking about the client who primarily manages his or her own account.  It is certainly possible to be an ethical investor without managing one’s own accounts.  In fact, the majority of people hire a professional to handle that chore for them.  Managing a portfolio is, indeed, a chore.  It takes a lot of time (if it is to be done correctly) and a lot of homework.  For many investors, this just is not feasible for many and varied reasons.

  For investors who simply do not desire to handle their own accounts, there should be no feelings of guilt.  That is why there are professionals willing and able to do the job for their clients.

Ethical Banking

  Few people consider the banks they use for their checking and short-term savings accounts from an ethical standpoint.  Generally, we tend to pick our bank for location or because our car loan is located there.

  When we deposit our paycheck in a bank, we are allowing them to use our money for their needs.  In effect, we are “loaning” them our money.  The social implications have to do with how our money is used.  Very few banks invest according to any social criteria.  Nor do they lend on the basis of social criteria.  Luckily there are variations that depositors can take advantage of.

CREDIT UNIONS

  Of all the banking institutions, credit unions are most likely to match an investor’s ethical requirements.  In addition, they often offer the best interest rates and lowest-priced loans.  Because credit unions are formed to represent a specific group of people, their charters have a “common bond.”  The common bond may be quite loose, such as a union group, or much more defined, such as teachers.  Some of the common bonds may even have a social purpose, such as gay and lesbian people.

  In addition to the traditional credit unions, there are also community development credit unions, called CDCUs.  CDCUs are intended to help disadvantaged communities, which tend to be primarily low-income.  Traditional banks generally ignore or under service poor communities.  They are happy to take their deposits, but reluctant to give these community members loans.  Therefore, traditional banks are more likely to extract money than to spread it out among the poor.  By law, credit unions can lend only to their depositors (their members) so a credit union located in a poor neighborhood will also be loaning out to those same people.

  Poor or lower income neighborhoods are especially hurt by companies that overprice their services.  This would include check cashing companies, short-term loan companies (usually for 30 days or less), and even loan sharks.  All of these entities charge too much for the services they give.  No one should use these companies, of course, but poor individuals often feel they have no other choice.  When a CDCU exists in the neighborhood, there is less likelihood that the people in the community will use the companies that take advantage of them.  In addition, credit unions provide other services including money management training.

  Not everyone can join just any credit union.  There must a common bond, under the law.  Even so, there is enough variety that just about anyone can find a credit union to join.  For some, the only common bond is the county in which they live.  Even some religious groups have credit unions.  In addition, most credit unions allow relatives of members to join.

MINORITY OWNED BANKS

  Some traditional banks have attempted to become more socially conscience.  Some of these are minority owned.  These often tend to be more responsive to the needs of minorities and disadvantaged people.  Those who wish to support these banks should use their services, not only for checking accounts, but also for such things as IRAs, Certificates of Deposit, and money market accounts.

  Of course, there are responsible banks that are not minority owned.  However, traditional banks who demonstrate their desire to benefit the communities are usually small when compared to national commercial companies.  It is more difficult to deal with a socially responsible bank unless one happens to be located nearby.  However, for those who are determined, it can be done.

Socially Responsible Credit Card Companies

  Who would have believed it?  The possibility of a socially responsible credit card company!  This would apply to many types of credit cards, but primarily they tend to be store cards.  Sometimes the consumer finds it is best to buy from locally owned stores if the storeowners are part of the community.  Anytime the owner is involved in the community, his or her business practices will likely reflect that.  It also supports the local economy.

United Insurance Educators, Inc.

mail@uiece.com

Telephone: 253.846.1155