Why ethics training is critical in the finance industry

John Sherman

Although adopting and following good ethical practices is vital regardless of the industry, it’s particularly critical for the finance industry. If you have a company that handles investments, banking, loans, or another aspect of this market, there’s no margin for error.

After all, not only does your company deal with people’s money but also their futures. Individuals and businesses that turn to you for assistance depend on the fact that you’ll make the right decisions on their behalf.


Although most companies in the finance industry follow strict internal policies along with government laws and regulations, you know as well as anyone that sometimes, things go very wrong. All it takes is for one employee to make an unethical move to send both the customer and the company spiraling out of control.

Bernie Madoff’s Ponzi scheme is a perfect example. He, along with other members of his staff, became greedy. As a result, they began to do unethical things that resulted in the theft of millions upon millions of dollars from clients, ruined lives, and sent he and his clan to prison. Of course, stealing is just one of the many unethical things that people in the finance industry do.

This story along with many others has created a perception among consumers that the financial industry is unethical. That means you already face an uphill battle in building your customer base and retaining clients you already serve. One of the challenges is this industry encompasses multiple sectors, including securities firms, investment banks, mortgage lenders, insurance companies, mutual fund organizations, and more.

With so many entities making up a massive market, whenever something unethical happens, it spreads like wildfire throughout different news organizations. The other thing to consider is that because the finance industry is so heavily regulated, people quickly identify and report unethical events. 

Before long, people around the world, whether a customer or not, know what happened. As mentioned, there’s no room for error within your organization in that one tiny slip up could prove disastrous. This is why ethical training for your entire staff is crucial.

Identifying Risks

As part of this industry, it’s imperative that you understand the most common pitfalls. Knowing the difficulties that happen most often will help you and your leadership team stay on top of potential issues, snuffing out fires before they engulf everything. In particular, five things stand out.

  1. Selfishness and Greed – Taking from a quote in the Bible in I Timothy chapter 6 verse 10, “For the love of money is the root of all evil…,” nothing is closer to the truth. Sadly, some people are self-serving, meaning they go after what they want at the expense of others. Once these individuals take that first step toward doing something unethical out of selfishness and greed, seldom do they stop. For people in this category, the goal is to accumulate as much as possible quickly.
  2. Demanding Clientele – Another area in which online training dramatically helps is by defining the responsibilities of your leaders and their staff members. That way, when customers become demanding and push for an employee to bend a little, there’s no temptation. You need a well-defined plan for your organization so that workers know who to turn to when faced with demanding clients. Because there’s a close connection between customers and employees in the finance industry, the goal is to build loyalty from the people who work for your company and gain respect from the clients you serve.
  3. No Moral Compass – Whether lacking sound mentoring from parents or guardians while growing up or perhaps having the inability to look past one’s own perceptions, some people in the finance industry have no moral compass. In fact, some of these individuals are so good at convincing others, and they get away with doing unethical things without anyone questioning them.
  4. Internal Conflict – For your company, it’s vital that you have a viable reward system in place. The reason is that if you give kudos that don’t bridge the gap between your staff’s responsibility and company demands, you promote unethical behavior. In simple terms, if your current reward system creates room for cheating, even a little, there’s a chance of someone acting unethically for monetary gain. Instead, you should implement a system that encourages honesty, perseverance, and integrity as opposed to dysfunction.
  5. Moral Versus Legal Behavior – Do you know someone who always runs the yellow light, picks up the tip change left on the table for the server, or behaves poorly in some other way? While perhaps that individual’s actions are not a crime, they do equate to bad moral behavior. One of the benefits of setting up a training program within your organization specific to ethics is it stipulates punishment for illegal behavior. Without consequences, some people will continue to push boundaries.

Remember, unethical acts aren’t always about stealing large sums of money. This could be something as simple as padding an expense report, using a corporate credit card on a personal dinner date, stretching the number of hours worked, fudging on the truth about what your company can deliver, and so on. 

What it comes down to is you have the responsibility to take control over your company’s success by knowing where risks exist and putting a plan of action in place to address them.

Developing and Maintaining an Ethical Work Environment

Kathie Rotz, CPTM Director of Learning at Honkamp Kreuger might have said it best, “A major reason employees behave unethically is because they don’t value company ethics.” If you want people in your organization to stay on the right path, you need to develop and maintain an ethical work environment. By doing so, you foster positive attitudes among your staff.

The thing with training in the finance industry is it touches on every department. You can select the best courses specifically for your sales and marketing team, the HR group, compliance managers, and so on. Using online courses as the groundwork, you set the stage for what the company expects from everyone, including the consequences of unethical acts.

The goal is to change the mindset of your employees, so they focus on providing excellent customer care rather than the outcome of selling a product, solving a problem, or locking in a major investor. Training proves highly beneficial in this area as well. Through a trusted Learning Management System, you can create a customer-centric training program. 

However, for any training to work the way you want, it has to start with your leadership team. After they complete courses, your HR Manager, L&D Manager, Compliance Manager, and other executives can devise the right approach for their respective teams, as well as lead by example. Also, you need to make training an ongoing part of the organization, especially considering how fast things can change in the finance industry. 

Building on Trust and Ethics

One look at the housing market crash in 2008 is enough to understand the devastation that unethical practices unleash on innocent people. Handing out loans to buyers without the necessary qualifications eventually led to a bona fide recession, costing millions of people their homes and leaving them in financial destitution.

Do you remember the statement about starting with your leadership team? If you want an ethical organization, you have to develop ethical leaders. Although there are several different ways to accomplish this, one involves cross-training. Working as a check and balance system, it keeps people honest and makes them accountable.

Not only that but by cross-training the leaders within your company, you provide them with an avenue for identifying alternative solutions. Instead of believing there’s only one way to do something, they begin to see different perspectives. Over time, training helps them develop powerful thinking and processing skills that lead them to make ethical choices.

At the same time, your management team must develop trusting relationships with their staff members. Using various online training courses, your leaders improve on communication, which makes it easier for employees to come forward when they notice something unethical happening in the workplace.

Instead of getting scared of the consequences of being a whistleblower, employees begin to feel confident their managers will maintain confidentiality and handle the situation in the correct way. With so many incredible online courses, the sky is the limit as to the caliber of the program you can implement in your organization.

You want every employee to know that simply turning a blind eye to unethical behavior is never okay. While an issue may appear to affect just one department, the reality is it impacts the company as a whole. For that reason, it’s critical for every person to look beyond themselves and understand that preventing and correcting unethical actions requires the effort of the entire organization. 

The challenge is that in some instances, an individual who spots someone doing something unethical either feels frightened to come forward or like a disloyal friend. Building confidence in your employees will help give them the courage needed to report suspicious things as they happen. Fortunately, a trusted Learning Management System has a massive library of topics to develop people into strong, dedicated, and confident employees willing to protect the business.

The Chinese Wall

As someone in the finance industry, you probably know all about the Chinese Wall theory. With this, you segregate different divisions within the organization to prevent sharing insider secrets that could shake the company to its core. Instead of having various professionals caught in the middle of a security breach, you protect different areas of the company.

You can think of the Chinese Wall theory as a virtual information barrier that separates employees who have and don’t have information unavailable to the public. As for training, you can provide the same opportunities for every employee, yet at the same time identify courses most beneficial to each separated division.

Avoiding a Scandal

The last thing you want is for your company to become a headline. As the number of stories breaks about unethical practices in the finance industry, you need to do everything possible to prevent chaos. Because unethical behavior is often the result of a lack of education and knowledge, training is at the heart of the solution.

As an example, when you onboard new employees, not everyone has years of experience working in the world of finance. For that reason, those individuals create some degree of risk. Implementing a training program for all new hires is an excellent way to teach them the basics of finance. You can then rely on your leadership team to offer more training opportunities as the need arises.

With so many courses available on the right Learning Management System platform, you can provide training to every employee, regardless of current understanding and knowledge. While focusing on the fundamentals for your administrative staff, you would hone in on more complex topics for analysts, financial advisors, lenders, and so on.

When talking about the basics, both new and long-term employees should understand the meaning of non-public information. They need to know that sharing employee earnings, talking about bonus programs, and revealing products under development is not just a big “no-no,” but unethical. Keep in mind that people without any experience in the finance industry would have no idea unless you inform them.

True Story

A young woman went to work as a bookkeeper for an insurance company. Although she had never worked in this capacity before, she was intelligent and willing to learn. Her husband worked for an agency that did business with this company. While sitting down at dinner one night, the husband made a flippant remark that the wife’s boss should give her a good Christmas bonus because the company did so well that year. 

Keep in mind the husband never mentioned a dollar amount. Without proper understanding and knowledge of the finance industry, the wife shared the comment with her boss the next day at work. Within an hour, the company fired her. Although the husband didn’t lose his job, he came close. One simple comment that contained no hard facts did a lot of damage.

In addition to the wife becoming unemployed and the husband embarrassed, the agency and insurance company’s relationship fell apart. One innocent statement damaged the trust to the point of no return. Had this woman received proper training at the start of her new career about sharing non-public information, she would have laughed things off with her husband and never said a word. While unintentional, what the wife did was unethical in the eyes of her employer. 

Take Charge 

For all the training material you need, visit the Go1 website. We offer a comprehensive library of information, prepared and often presented by experts on the topic of ethics in the finance industry.

Go1 helps millions of people in thousands of organizations engage in learning that is relevant, effective and inspiring.
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