Steven R. McCarty
Moral courage: The key to extinguishing deceptive
seminars and designations, (part 2)
How would you respond to
misgivings about unethical
behavior around you?
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Several months ago, an agent approached me with an ethical concern. Formerly affiliated with a large FMO, he claimed
its advisors were telling seminar attendees to
expect a 4 to 6 percent return on their annuity
purchases, despite the typical 2 percent payout
with competing products. What’s more, he
alleged the FMO was benchmarking its annuity
contracts’ performance to a 3 percent bond
and S&P 500. However, instead of illustrating
a current, lower-yielding annuity, it compared
those investments against a higher yielding
annuity from more than 10 years ago,
strengthening the case to buy its offerings.
The agent brought his misgivings to the
FMO’s owner and top producers. But this just
created bad feelings, ultimately sparking a
cease-and-desist letter from the FMO’s attorney. Unable to square his ethical values with
what he perceived to be the FMO’s deceptive
sales practices, he moved to a competing
Granted, I just heard one side of the story,
and perhaps the FMO had legitimate reasons
for illustrating its annuities that way. But I
understood why the agent was concerned, and
I admired him for leaving on his own terms.
How would you have responded? Report
the violators to regulators as I suggested
last month? Team up with other advisors to
launch your own shop? Quit and join another
FMO? Difficult choices, but the key is to ACT!
And that takes moral courage.
Moral courage is important because there
are powerful forces defending the status quo.
When you challenge bad actors, nasty things
can happen, and advisors and their families
can get hurt. So when confronting unethical
conduct, you must have the courage of your
beliefs and the wisdom to choose a response
that doesn’t wreak havoc on you and on those
Rushworth M. Kidder, an ethics consul-
tant and writer who died some years ago,
illuminates such decisions in his book “Moral
Courage.” He said that having ethical values is
not the same as living those values. One can
be ethical, he wrote, but also lack the moral
courage to move beyond ethical reasoning into
Rushworth goes on to share several key
characteristics of moral courage:
• Know the core ethical values you’re willing
to fight for, even at great personal cost.
• Have a clear picture of the risks of fighting
for those values.
• Be willing to endure both external and
internal attacks, from status quo defenders
and your own self-doubt.
So the next time you witness a colleague or
competitor using seminars or designations
to deceive prospects, will you stay silent or
defend your values? I hope you take the latter
course. To that end, here’s a path you might
1. Share your concerns with your FMO.
Focus on behaviors, not personalities, and
brace yourself for angry blowback. Also be
prepared for the line, “How could you do
this after everything we’ve done for you?”
2. Encourage the FMO to reform its
practices. Enumerate the benefits of
doing so for all concerned.
3. Think hard about the wisdom of filing
a regulator complaint. It may embroil
you in an investigation that makes it
difficult to continue writing business.
And it may even make it hard or impossible
to find another job.
4. If the FMO refuses to change, remove
yourself from the situation. This is
difficult, but often the best action to take.
If more advisors adhered to this path, I
believe we could extinguish the industry’s
smoldering problems with seminars and
designations in relatively short order. RA