1. TOPIC 5 – OBLIGATION TO CLIENTS

2. REVIEW: HOW TO MAKE SOUND ETHICAL DECISIONS What is the right thing to do ? Be motivated to d the right thing Have the appropriate emotional response

3. PEOPLE WITH INTEGRITY: Understand and communicate their own values, but also are able to understand and communicate with people who have different values. Are imaginative and are good at thinking about the long and short term consequences of different strategies Respect and care for people and build successful relationships When they disagree, they don’t lose their temper Are brave, honest, humble, and fair Understand the role of ethics in their personal, civic, and working lives. Have a robust sense of justice and work to create more just institutions.

4. HOW DO YOU “LEAD WITH INTEGRITY” Five essential features of good leaders: They model the way Inspire a shared vision Challenge the Process Enable others to act Encourage the heart. You can do none of these without integrity: Doing what you think is right, even when this means leading and not following the crowd. Your conviction to do what is right will bring others along.

5. HOW TO BE A PROFESSIONAL WITH INTEGRITY

6. PROFESSIONAL-CLIENT RELATIONSHIP Types of P-C Relationships: Paternalistic: Professional has authority over Client Agency: P is agent acting under direction of Client Friendship: P & C act as friends/partners, take turns Contract: P & C equally share authority & responsibility All of these have a weakness that makes them less effective than Fiduciary P-C relationship: P & C both have authority & responsibility Relationship functions effectively because the division of labor makes best use of the strengths of both the P and C.

7. FIDUCIARY where one person places complete confidence i n another in regard to a particular transaction or one’s general affairs or business. The relationship is not necessarily a legal one, but can be of moral or personal responsibility. Arises due to the superior knowledge and training of the fiduciary as compared to one who affairs the fiduciary is handling

8. FOR EXAMPLE Trust Department of a Bank / Corporate Trust Company: The clients entrusts their money to the bank or company who is this responsible for investing it wisely based on their superior knowledge of business Asset Managers The clients give control of assets over to managers who are responsible for protecting and caring for them.

9. MORE EXAMPLES Trustee – Beneficiary Trustee – is the legal owner of property Beneficiary – is not the legal owner of property. Trustee takes care of the property for the beneficiary. Corporate Directors – Stockholders Trustee – Directors Beneficiary - Stockholders

10. WHICH IS THE TRUSTEE AND WHICH IS THE BENEFICIARY Home Buyer / Real Estate Agent Lawyer / Criminal Executor / Heir Retiree / Retirement Plan Administrator Sick Person / Doctor Teacher / Student Guardian / Ward Company / Board of Directors

11. NOTES Fiduciary is expected to act at all times solely in the interest of the client. “A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.”

12. “FIDUCIARY DUTY” Your fiduciary duty is the HIGHEST “standard of care” in law. The fiduciary has an extra strict duty to: Work for the client only Not profit from their work without permission Not to accept the job if there is a client. Honestly, Honorably, Tirelessly.

13. LEGAL ANALYSIS To whom is he a fiduciary? obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from his duty?

14. WAYS THE PROFESSIONAL HELPS Analyzes the Problem Develops Alternatives Educates the Client Implements the decisions of the client

15. RULES The Professional’s responsibility to the Client is limited by whether or not: The Client keeps commitments Is honest about what is going on Does not ask the Professional to act Unethically

16. PROFESSIONAL OBLIGATIONS Fiduciary = Faith in One Another

17. PROFESSIONAL OBLIGATIONS Honesty: an obvious one: tell your client the truth, don’t lie

18. PROFESSIONAL OBLIGATIONS Non-maleficence: Do No Harm: related to diligence (doctor or nurse: do not harm your patient; teacher: don’t do anything to harm students)

19. PROFESSIONAL OBLIGATIONS Competence: maintain or increase your ability to provide professional service (teachers, continuing-ed courses, research). Also, you need to be aware of the limits of your abilities (not take on projects/clients not fully capable of assisting).

20. PROFESSIONAL OBLIGATIONS Diligence: doing your best for your clients (spread yourself too thin with too many clients, can’t do your best for any of them)

21. PROFESSIONAL OBLIGATIONS Loyalty: work for your client’s interests, not your own “Conflict of Interest” – You get kickbacks if client buys stock from xxxx company Your brother – in – law works for the company you invest in, and he will get a promotion if he lands your big client.

22. PROFESSIONAL OBLIGATIONS Fairness: treat your clients equally (teachers: not favor one student over another)

23. PROFESSIONAL OBLIGATIONS Confidentiality: protect your client’s private information; control access to client’s personal information

24. NOTE All 7 of these obligations the professional has to a client are also traits of a person who is living and leading with integrity.

25. HOMEWORK Business Accountant / Company Who is the trustee and Who is the Beneficiary Describe 2 Professional Obligations of the Trustee