The recent financial crisis exposed the dangers of unethical behavior focused on short-term profits.
Five years after Lehman Brothers toppled and kicked off the Great Recession, the financial industry should have gained an appreciation for the importance of protecting the integrity of financial markets and working in the best interest of clients. But has Wall Street learned its collective lesson and endeavored to act in a transparent and ethical manner?
Kind of and not really, a new survey has found. The survey of 382 executives is part of a report by The Economist Intelligence Unit, sponsored by the CFA Institute, entitled A Crisis of Culture: Valuing Ethics and Knowledge in Financial Services.
While ethical standards are clearly recognized as important and helpful by the financial services executives surveyed, there's a lot of doubt as to whether acting ethically can really be all that profitable.
The bottom line was that a great deal of interest was expressed in acting ethically, but when it comes to putting ethics into practice, many of those surveyed believed that a rigid adherence to ethical behavior could hamper individual employees' ability to move up the ladder. Fifty-three percent of those surveyed said that career progression would be difficult without being flexible on ethical standards, and only 37 percent said they thought their firm's financials would improve based on increased attention to ethical behavior.
At the same time, 67 percent of respondents say their firms have raised the issue of ethical conduct over the last three years, and 63 percent have strengthened their formal code of conduct. Just more than 40 percent of those surveyed said that their firms have begun offering incentives for adherence to ethical standards.
"There seems to be evidence that they are trying to do the right thing," says John Bowman, managing director and co-leader of education at the CFA Institute. "That said, there doesn't seem to be much impact. The culture has not shifted; they are they not putting their money where their mouth is. The most concerning thing is the idea that profits will be deterred or compromised with higher ethical standards."
"That is plain wrong," he says.
What is your perception of ethics on Wall Street?
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Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.