Ethics Flashcards
- What are four tests to help determine if an issue is ‘Right vs. Wrong’ issue?
a. Legal test – is it legal
b. Smell test – does it smell or feel right? Even if the person doesn’t know why it is wrong or what part of the action is wrong, most people have intuition about whether sith feels right or wrong
c. Front-page test - deal with reputation, how would it look if this decision ended up on the front page of global and mail newspaper
d. Mom test - would you feel comfortable telling your mother or any other ethical person whose opinion really matters to you
e. If decision fails any of the above test, it is probably wrong, and therefore, by a process of elimination, the individual will know what the right decision is.
- When does a fiduciary duty typically exist?
a. When one person holds a portion of total trust, this person is called the fiduciary, e.g. advisor, with the other person putting his/her complete trust in that individual, this person is called the beneficiary, e.g. an investor with no investment knowledge.
- Ends value: where you see your life heading in the future, these influence how we act today to achieve our future goals
Ex. You values monetary assets and see such assets as a sign of success. Your goal maybe to become independently wealthy by age 40 (end value). To reach the goal, you avoid close friendships and defer starting a family so you can work 80 hrs a week (means value)
- Means value – what you need to do today to reach your future goals.
These are the actions that you take today to achieve your future goals
- How would you define an Agency relationship? – Agency can be defined as relationship in which one party – the agent is authorized to bring another party – the principal into contractual relations with a third party
a. In Quebec, agency is known as Mandate
- What gives an advisor the ability to enter trades on behalf of a client w/o the client having any direct contact with the person on the other side of the transaction?
a.
a– the law of agency
- Business ‘code of ethics’ to be effective, what four items are required
a. Code must be supported by senior management
b. Employees from all levels of the organization must participate in the development and reinforcement of the code of ethics, this creates buy-in
c. Implementation must include training and reinforcement of code
d. The code of ethics should be reviewed periodically and updated with necessary
- Four main right versus right dilemmas, can you name them?
a. Truth vs. Loyalty (Dilemma: Integrity)
b. Individual vs. Group (Dilemma: social)
c. Short term vs. long term (Dilemma; goal based)
d. Justice vs. Mercy (Dilemma: fairness)
- What are ethical decision making process involves the following eight steps:
a. Determine if there is a moral issue that requires further analysis
b. Determine whose moral issue it is – who makes the decision
c. Gather the facts
d. Test to determine if it is
i. right vs. wrong issue using the four right vs. Wrong test.
ii. If the situation fails one of the wrong tests, then there really isn’t a decision to be made;
iii. eliminate the wrong action and go with the right one!
e. If the decision passes, i.e. there is no wrong involved, then test to determine
i. if there is right vs. right issue using the four right vs. right tests
f. Apply the resolution principles
g. Make a decision and take the appropriate ethical action
h. Reflect on the decision and process
i. In step 4, if the situation fails one of the wrong tests then there really isn’t a decision to be made, eliminate the wrong action and go with the right one!
- Law and ethics do not necessarily mean the same thing
you can abide by the law whole not being ethical
- What is Social contract-based ethical thinking
a. – if followed, it would create harmonious relationships within your group
- What is ends-based ethical thinking?
a. - if followed, the decision would result in the greatest good for the greatest number of people
- What two qualities does an advisor generally need to possess for a trust relationship to develop?
a. Trust comprises two qualities-
i. Trust in the advisor’s competence, ability, and
ii. Trust in the advisor’s integrity
b. Both need to be present for trust to exist. For example, a competent and skilled advisor cannot be trusted if he/she acts unethically.
c. Conversely, an unknowledgeable advisor cannot be trusted no matter how much integrity he/she demonstrates
- Ethics broadly defined as a Set of consistent value that guide individual behavior
a.
Standards that guide a particular group or profession
b. A set of moral values or principles – morals are the norms or standards of society in reference to what is right or wrong. Cheating on a spouse is considered immoral
c. The study of morality or moral choices
- With a ‘right versus wrong’ dilemma, at least one of the four things usually present.
a. One action is illegal
b. One decision lack basic truth
c. The negative consequences will far outweigh the positive results
d. One decision doesn’t conform to society’s widely shared and understood values
