The Ethics Quiz: 10 Secrets to Avoiding Lawsuits

You’re ethical, right? You do thorough fact-finding with clients. You recommend only appropriate insurance or investment products. You believe in full disclosure. And since you do these things, your clients believe you are ethical. So what’s the problem?

The problem is you’re a human being. That means you’re hard wired to get comfortable when life is good. The more success you achieve, the more comfortable you’ll get. And when complacency erodes your commitment to ethics, your ethics edge will get dull. Before long, you’ll be breaking the rules, making mistakes, and getting sued.

How to avoid this? By periodically testing—and sharpening—your business practices. The ethics quiz below will get you started.

  1. Do you always protect and promote your client’s best interests, even if it’s not to your financial advantage?
  2. Are you totally honest in explaining your education and business background, including your licenses and designations?
  3. Do you always disclose the important features of your products or services, including potential risks that may affect future performance or value?
  4. Are you totally truthful about the realistic returns or future values a client can expect?
  5. Do you thoroughly probe a client’s current and future needs in order to make suitable recommendations?
  6. Do you respect client confidentiality even under third-party pressure to disclose information?
  7. Do you only use advertising and presentation materials that are completely accurate and legally compliant?
  8. Do you always provide clients with copies of required documents relating to the products or services they have purchased?
  9. Do you always refer your clients to an outside professional for expertise that is beyond your training and current license?
  10. Do you stay up to date on all industry practices, including emerging trends, new government regulations, and the latest product or service innovations?

Obviously, the correct answer is “yes” for all 10 questions. How did you do?

If you scored 90 to 100%, your ethics edge is ultra sharp. Your challenge: to further sharpen your ethical practices and to share them with others by becoming an industry leader.

If you scored 70 to 80%, your ethics edge is getting dull. Solution: Think hard about where your business and life are headed. Read trade journal articles about ethics. Recommit to high levels of integrity in every aspect of your business—and life.

If you scored 60% or lower, your ethics edge is rusting over. If you continue in this direction, client complaints, regulator sanctions, and errors-and-omissions lawsuits are in your future. Solution? As soon as possible, challenge yourself to get serious about ethics and adopt high-quality business practices. Write and post a new code of ethics for your firm—and pledge to live by it every day. Use our code as a guide.

The point is this: Nothing is more important than your professional integrity. Once you lose your ethics edge, you run the risk of rusting over entirely and becoming an E&O target for plaintiff’s attorneys. Trust us . . . you don’t want this to happen.

Visit our Ethics Headqurters for more informational resources.