"Gauging Trust: Are There Objective Measures to Determine Which Investment Advisers Will Act Ethically?"
Original Article by Jon Stokes of CFA Institute
This introductory post by Stokes asks the key question, "How can investors gauge the integrity of the investment professionals and firms they are considering hiring?" While CFA will cover several key components to answering this question, this blog focuses on the topic of ethics.
The personal ethics of individuals that make up a firm establish the culture integrity of the organization. Firms can enforce policies and procedures or adopt a code of ethics to combat unethical persons in their employ, but that may be an imperfect method of addressing an individual's flawed moral and ethical framework. While a strong indicator of a firm's corporate commitment to ethics, the existence of a code of conduct, by itself, is not sufficient to prevent unethical behaviors of individuals within the firm.