Continuing the theme of Praxis – Part 4 in an 6 part series

Aristotle said: “Whatever we learn to do, we learn by actually doing it (Praxis); men come to be builders, for instance, by building, and harp players by playing the harp. In the same way, by doing just acts we come to be just; by doing self-controlled acts, we come to be self-controlled; and by doing brave acts, we become brave.”

Personal financial planners, must not only have knowledge and experience, they most also possess ethics. And if we follow along Aristotle’s line of reasoning, ethics or “just acts” are acquired by ‘doing just acts/being ethical.’ And in financial services, ‘doing just acts/being ethical’ is a challenge.Products provided by financial services firms come in all shapes and sizes, and unfortunately, the pricing for their products is more analogous to an automobile sale than to a commodity transaction. An example of this pricing issue is the variable pricing model. The same product may be sold to two consumers and the consumers may pay two different prices. The pricing is variable in order for the adviser to adjust their compensation based on the amount of effort necessary to achieve the sale.

I understand the need for compensation. I do not understand the need for not fully disclosing the variety of pricing models. One example of this issue was the A, B, and C mutual funds shares debacle. The NASD had to step in and provide rules to protect the consumer from advisers who were either unethical, uneducated or both. Oh yeah, and then there was the whole collateralized mortgage obligation Great Recession of 2007 – 2009 thing.

Ethics cannot be taught it must be worked out in practice, working alongside someone who is ethical. Please note—unethical is not necessarily illegal. Unethical may be an individual who has chosen to limit the products and/or services offered because there are too many choices, and then tries to fit a square peg into a round hole in order to meet a consumer need.

Personal financial planning is truly a discipline. It does require a formal certification from a recognized body. It does require state regulation. It should have an academically recognized body of knowledge. Praxis should be mandated before engaging as a solo practitioner. And ethics training should be more than two hours every other year!

I hope you will join my webcast Personal Financial Planning: Regulations, Updates, Future of the Profession on Friday, February 28 at 1:30 PM EST. This Webcast will review the history of Financial Planning and the Investment Adviser’s Act of 1940. Additional topics to be discussed are the regulation of Financial Advisers and the three main organizations which provide certification for Personal Financial Planning. The presentation is web based and virtual seating is limited. The course is approved for one hour of CPE and CE. For more information or to register, please email at




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