Rules, rules and more rules. Estate-planning professionals are barraged with mandates on what they should — and should not — do. So, in 1998, the Philadelphia Estate Planning Council (PEPC) decided to help its members sort through the ethical codes and standards of conduct.

The PEPC first formed an ethics committee comprised of its own members, including lawyers, investment and life insurance professionals, financial planners, accountants and valuation experts. The committee focused on “the Five Cs” — compensation, competence, compliance, confidentiality and conflicts of interest/disclosure — and compared codes of ethics, rules of professional responsibility and standards of practice for various estate-planning disciplines. In September 1998, Trusts & Estates published PEPC's first comprehensive matrix summarizing its findings.

Six years ago, things were very different. The hot topics then were multidisciplinary practice and a new idea: wealth management teams.

Today, ethics is a household topic, given Martha Stewart's trial and news of the alleged abuses at Enron, WorldCom and Tyco. Consumers, investors and employees are conscious of whether their trusted advisors and companies are living up to their promises — and demand justice when they don't.

Wealth management professionals also are doing some soul searching. Those who cross-pollinate, by offering legal, accounting and insurance advice or referrals, are asking, “What does it mean to offer the ‘best advice' for a client?” Does the best advice get the client the best deal? Or is the best advice that which will survive scrutiny?

While all advisors want to maximize value, they're taking a step back to ensure their actions are within ethical bounds. More than ever, there is a recognition that advisors' professional reputations are at stake. The upshot is that advisors must spend more time considering the consequences of their actions.

To help wealth management advisors of every type function better in this brave new world, the PEPC has updated the ethics matrix. The new matrix not only takes into account amendments and revisions made to some of the applicable codes, but also includes new organizations whose members have joined the ranks of wealth management professionals. There has been a proliferation of organizations since 1998, as well as some group name changes and restructuring.

But advisors beware: The updated matrix does not show the consequences of violating a code of ethics or rule of professional conduct. Each organization has its own process of censure and penalty. For guidance, advisors should consult applicable codes and rules. Also note that this matrix highlights only portions of the codes and rules, so practitioners should consult the most recent editions in their entirety.

The 2004 matrix is offered as a starting point to promote the highest ethical standards when dealing with clients, as well as with the myriad of other professionals who now form the estate-planning team. Practitioners who aspire to maintain the utmost integrity will be doing a service not only to their clients, but also to the estate-planning profession as a whole.

METHODOLOGY

It took a small army to compile the 2004 Ethics Matrix. Members of the Philadelphia Estate Planning Council's Ethics Committee are:

  • Jeb Bell, senior trust counsel, Mellon Financial Corporation, Philadelphia
  • Gregory Dienna, director, client management, Calibre, Philadelphia
  • Ronald F. Duska, professor of ethics, The American College, Bryn Mawr, Pa.
  • Stephen H. Frishberg, of counsel, Fineman Krekstein & Harris, P.C., Philadelphia
  • Albert E. Gibbons, president, AEG Financial Services, Phoenixville, Pa.
  • John P. Grimes, associate vice president, The American College, Bryn Mawr, Pa.
  • Russell E. Gordon, partner, Goldenberg Rosenthal, LLP, Jenkintown, Pa.
  • Paul C. Heinz, Obermayer Rebmann Maxwell & Hippel, LLP, Philadelphia
  • Adam S. Kazan, Adam S. Kazan, CPA, Philadelphia
  • Joseph K. Koplin, Joseph K. Koplin, CPA, Philadelphia
  • Skip J. Massengill, vice president/managing director, Commerce Capital Markets, Inc., Philadelphia
  • L. Martin Miller, partner, Cogen Sklar, LLP, Bala Cynwd, Pa.
  • G. Bradley Rainer, partner, Eckell, Sparks, Media, Pa.
  • Melinda G. Rath, first vice president, The Glenmede Trust Company, Philadelphia
  • Howard Silverman, president, HSA Corporation, Bala Cynwd, Pa.
  • Mauria E. Tesauro, vice president, Wilmington Trust of Pennsylvania, Doylestown, Pa.
  • Gordon Wase, member, Wase & Wase, Philadelphia
  • David R. Watson, Phoenix Life Insurance Company, Medford, N.J.
  • Robert J. Weinberg, partner, Pepper Hamilton LLP, Philadelphia
  • Ronald M. Wiener, member, Wolf, Block, Schorr & Solis-Cohen LLP, Philadelphia
  • Andrew Wilusz, director, mergers and acquisitions, Value Management Inc., Newtown, Pa.

ETHICS MATRIX 2004

A STARTER KIT OF RULES AND CODES FOR WEALTH ADVISORS
Organization/Code Confidentiality Conflicts of Interest/Disclosure Competence Compliance Compensation Miscellaneous
AMERICAN ACADEMY OF ACTUARIES Code of Professional Conduct (Effective Jan. 1, 2001)
(202) 223-8196 www.actuary.org/pdf/prof/code_of_conduct.pdf
An Actuary shall not disclose to another party any Confidential Information unless authorized to do so by the Principal or required to do so by Law.
Precept 9
An Actuary shall not knowingly perform Actuarial Services involving an actual or potential conflict of interest unless:
a. the Actuary's ability to act fairly is unimpaired;
b. there has been disclosure of the conflict to all present and known prospective Principals whose interests would be affected by the conflict; and
c. all such Principals have expressly agreed to the performance of the Actuarial Services by the Actuary.
Precept 7
An Actuary shall perform Actuarial Services only when the Actuary is qualified to do so on the basis of basic and continuing education and experience and only when the Actuary satisfies applicable qualification standards.
Precept 2
An Actuary shall ensure that Actuarial Services performed by or under the direction of the Actuary satisfy applicable standards of practice.
Precept 3
An Actuary must be familiar with, and keep current with, not only the Code, but also applicable Law and rules of professional conduct for the jurisdictions in which the Actuary renders Actuarial Services. An Actuary is responsible for securing translations of such Laws or rules of conduct as may be necessary.
Beginning of Code
An Actuary shall make appropriate and timely disclosure to a present or prospective Principal of the sources of all direct and indirect material compensation that the Actuary or the Actuary's firm has received, or may receive, from another party in relation to an assignment for which the Actuary has provided, or will provide, Actuarial Services for the Principal. The disclosure of sources of material compensation that the Actuary's firm has received, or may receive, is limited to those sources known to, or reasonably ascertainable by, the Actuary.
Precept 6
An Actuary shall not engage in any advertising … with respect to Actuarial Services that the Actuary knows or should know are false or misleading.
Precept 11
AMERICAN BANKERS ASSOCIATION INSTITUTE OF CERTIFIED BANKERS Professional Code of Ethics
1-800-BANKERS (226-5377) www.aba.com/NR/rdonlyres/00007c38yitymksxhsznatpx/ICB_candidate_app1.pdf
Safeguard the confidential nature of information concerning the business transactions and condition of my employer and of my employer's present and prospective customers, clients, borrowers or suppliers, except where disclosure of such confidential information is required by state or federal law regulation.
Part 7
Conduct my professional affairs in a manner that avoids a conflict of interest or the appearance of a conflict of interest.. If I become a party to a conflict, or the appearance of a conflict is created, I shall inform my supervisor as soon as possible.
Part 1
Strive to become and remain proficient in carrying out my professional duties. If I accept responsibility for handling new and unusual professional activities, but I find that it is beyond my competency, then I agree that I am expected to become competent by diligently undertaking the work and study necessary to qualify myself, or to obtain the assistance of a professional possessing the necessary skills or competency.
Part 9
Not have signed, nor will I sign, a consent decree with the Securities and Exchange Commission or any state securities agency or be found guilty nor will I be found guilty in a competent court of jurisdiction or a federal or state regulatory proceeding of any of the following offenses.
See the rest of Part 8 for a list of offenses.
[Not specifically addressed in this code.] Owe a solemn duty to uphold the integrity and honor of my profession and to encourage respect for it. I further agree to promote the continual development of the financial services industry, as well as my respective organization.
Part 4
AMERICAN BAR ASSOCIATION Model Rules of Professional Conduct (As amended through August 2003) (202) 662-1000 www.abanet.org/cpr/mrpc a. A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b)
b. A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary …
[Subject to certain exceptions, which vary from state to state, such as to prevent the client from committing a criminal act.]
Rule 1.6
A lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:
  1. the representation of one client will be directly adverse to another client; or
  2. there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

Rule 1.7
A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.
Rule 1.1
A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.
Rule 1.2(d)
The scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated to the client.
Rule 1.5(b)
A lawyer shall not accept compensation for representing a client from one other than the client unless:
  1. the client gives informed consent;
  2. there is no interference with the lawyer's independence of professional judgement or with the client-lawyer relationship; and
  3. information relating to representation of a client is protected as required by Rule 1.6.
    Rule 1.8(f)
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Code of Professional Conduct (As amended May 31, 1999) (888) 777-7077 www.aicpa.org/about/code/index.htm A member in public practice shall not disclose any confidential client information without the specific consent of the client.
Rule 301
In the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgement to others.
Rule 102
A member shall …. undertake only those services that the member or member's firm can reasonably expect to be completed with professional competence.
Rule 201A
[Not specifically addressed in this code.] A member in public practice shall not
  1. Perform for a contingent fee… (a) an audit or review of a financial statement; or(b) A compilation …; Or(c) An examination of prospective financial information; Or
  2. Prepare a … tax … return … for a contingent fee for any client.
    Rule 302 (For limitations on commissions and referral fees, see Rule 503.)
A member shall …. obtain sufficient relevant data to afford a reasonable basis for conclusions or recommendations in relation to any professional services performed.
Rule 201D
AMERICAN SOCIETY OF APPRAISERS Principles of Appraisal Practice and Code of Ethics (Revised January 1994) (703) 478-2228 www.appraisers.org/join/code_ethics.cfm The fact that an appraiser has been employed to make an appraisal is a confidential matter. [Contents of appraisal report also confidential.]
Section 4.1
The society declares that, … it is unethical and unprofessional for an appraiser to accept an assignment to appraise a property in which he/she has an interest or a contemplated future interest.. [Subject to certain exceptions after full disclosure.]
Section 7.3
It is not proper for an appraiser to accept an engagement to make an appraisal of a property of a type he is not qualified to appraise …
Section 4.2 (See also Sec. 3.4.)
[Not specifically addressed in this code.] [T]he Society declares that the contracting for or acceptance of any such contingent fee is unethical and unprofessional. [Similar restriction of commissions, finder's and referral fees.]
Section 7.1 (See also Sec 7.2 regarding percentage fees.)
Advocacy … affects adversely … trust and confidence … and the Society declares that it is unethical and unprofessional.
Section 7.5
THE APPRAISAL FOUNDATION Uniform Standards of Professional Appraisal Practice: Ethics Provision (As of Jan. 1, 2003) (202) 347-7722 www.appraisalfoundation.org/html/USPAP2003/toc.htm An appraiser must protect the confidential nature of the appraiser-client relationship.
Ethics Rule: Confidentiality Section
An appraiser must perform assignments ethically and competently, in accordance with USPAP and any supplemental standards agreed to by the appraiser in accepting the assignment. An appraiser must not engage in criminal conduct. An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.
Ethics Rule: Conduct Section
Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently; or alternatively, must:
  1. disclose the lack of knowledge and/or experience to the client before accepting the assignment;
  2. take all steps necessary or appropriate to complete the assignment competently; and
  3. describe the lack of knowledge and/or experience and the steps taken to complete the assignment competently in the report.
    Competency Rule
These Standards are for appraisers and users of appraisal services. To maintain a high level of professional practice, appraisers observe these Standards. However, these Standards do not in themselves establish which individuals or assignments must comply; neither The Appraisal Foundation nor its Appraisal Standards Board is a government entity with the power to make, judge, or enforce law. Individuals comply with these Standards either by choice or by requirement placed upon them or upon the service they provide, by law, regulation, or agreement with intended users.
Preamble
The payment of undisclosed fees, commissions, or things of value in connection with the procurement of an assignment is unethical. [Subject to certain disclosure exceptions.]
Ethics Rule: Management Section
An appraiser must prepare a workfile for each appraisal, appraisal review, or appraisal consulting assignment. The workfile must include the name of the client and the identity, by name or type, of any other intended users; true copies of any written reports, documented on any type of media; summaries of any oral reports or testimony, or a transcript of testimony, including the appraiser's signed and dated certification; and all other data, information, and documentation necessary to support the appraiser's opinions and conclusions and to show compliance with this Rule and all other applicable Standards, or references to the location(s) of such other documentation.
Ethics Rule: Record Keeping Section
ASSOCIATION FOR INVESTMENT MANAGEMENT AND RESEARCH Standards of Professional Conduct (As amended and restated May 1999) (800) 247-8132 www.aimr.com/pdf/standards/comparison_code_standards.pdf Members shall preserve the confidentiality of information communicated by clients, prospects, or employers concerning matters within the scope of the client-member, prospect-member, or employer-member relationship … [Subject to certain exceptions.]
Standard IV B 5
Members shall disclose to their clients and prospects all matters … that reasonably could be expected to impair the member's ability to make unbiased and objective recommendations.
Standard IV B 7
Members … shall … strive to maintain and improve their competence and the competence of others in the profession.
Preamble
A.) Maintain knowledge of and comply with all applicable laws, rules, and regulations … of any government, regulatory organization, licensing organization, licensing agency, …
B.) Not knowingly participate or assist in any violation of such lawyers, rules, or regulations.
Standard I
Members shall disclose to clients and prospects any consideration or benefit received by the member or delivered to others for the recommendation of any services to the client or prospect.
Standard IV B 8
Members shall not copy or use … material prepared by another without acknowledging and identifying the name of the author, publisher, or source of such material …
Standard II C
ASSOCIATION OF FUNDRAISING PROFESSIONALS Code of Ethical Principles and Standards of Professional Practice (Amended October 1999) (703) 684-0410 www.afpnet.org/tier3_cd.cfm?folder_id=897&content_item_id=1068 Members shall not disclose privileged or confidential information to unauthorized parties.
Standard 12
Members shall effectively disclose all potential and actual conflicts of interest; such disclosure does not preclude or imply ethical impropriety.
Standard 3
Members recognize their individual boundaries of competence and are forthcoming and truthful about their professional experience and qualifications.
Standard 6
Members shall comply with all applicable local, state, provincial, and federal civil and criminal laws.
Standard 5
Members shall not accept compensation that is based on a percentage of charitable contributions; nor shall they accept finder's fees.
Standard 16
Members shall take care to ensure that all solicitation materials are accurate and correctly reflect their organization's mission and use of solicited funds.
Standard 7
CERTIFIED FINANCIAL PLANNER BOARD OF STANDARDS, INC. Code of Ethics and Professional Responsibility (Revised July 2003) (303) 830-7500 www.cfp.net/certificants/conduct.asp A CFP Board designee shall not reveal
— or use for his or her own benefit
— without the client's consent, any personally identifiable information relating to the client relationship or the affairs of the client.
Rule 501 (Exceptions are listed in parts (a)-(d).)
A CFP Board designee shall perform professional services in a manner that is fair and reasonable to clients, principals, partners, and employers and shall disclose conflict(s) of interest in providing such services.
Principle 4
A CFP Board designee shall offer advice only in those areas in which the CFP Board designee has competence. In areas where the CFP Board designee is not professionally competent, the CFP Board designee shall seek the counsel of qualified individuals and/or refer clients to such parties.
Rule 302 (See also Rule 301.)
In all professional activities, a CFP Board designee shall perform services in accordance with:
a. Applicable laws, rules, and regulations of governmental agencies and other applicable authorities.
b. Applicable rules, regulations, and other established policies of the CFP Board.
Rule 606
Upon request by a client or prospective client, the CFP Board designee in a financial planning engagement shall communicate in reasonable detail the requested compensation information related to the financial planning engagement, including compensation derived from implementation. This disclosure may express compensation as an approximate dollar amount or percentage or as a range of dollar amounts or percentages.
Rule 403
A CFP Board designee shall exercise reasonable and prudent professional judgement in providing professional judgement in providing professional services.
Rule 201
FINANCIAL PLANNING ASSOCIATION Code of Ethics (800) 322-4237 www.fpanet.org/member/membership/join/ethics.cfm An FPA member shall not disclose any confidential client information without the specific consent of the client unless in response to proper legal process, to defend against charges of wrongdoing by the FPA member or in connection with a civil dispute between the FPA member and client.
Principle 5
An FPA member shall perform professional services in a manner that is fair and reasonable to clients, principals, partners, and employers and shall disclose conflict(s) of interest(s) in providing such services.
Principle 4
An FPA member shall provide services to clients competently and maintain the necessary knowledge and skill to continue to do so in those areas in which the designee is engaged.
Principle 3
An FPA member's conduct in all matters shall reflect credit upon profession.
Principle 6
[Not specifically addressed in this code.] An FPA member shall act diligently in providing professional services. Diligence is the provision of services in a reasonably prompt and thorough manner. Diligence also includes proper planning for and supervision of the rendering of professional services.
Principle 7
INSTITUTE OF BUSINESS APPRAISERS Code of Ethics (954) 584-1144 www.go-iba.org/ethics.asp Client data shall not, except under order of the following, be disclosed without a client's specific consent:
a) Court order
b) Order of the Ethics and Discipline Committee
c) Order of a licensing authority d) Order of another professional society's equivalent to the Ethics and Discipline Committee, in which the member also holds a membership.
Rule 3
[Not specifically addressed in this code.] A member must competently complete the engagement, using due professional care. This includes planning and supervising employees and subcontractors. A member shall be responsible for the function and accuracy of all analysis tools used in an engagement including, but not limited to, computer software, financial calculators and purchased or subcontracted economic or industry reports.
Rule 2
A member shall not commit an act discreditable to the profession.
Rule 6
Services shall not be rendered where the fee is contingent upon the findings or results of such services, unless fixed by the courts or a governmental body or agency.
Rule 4
Advertising and solicitation shall not be false, misleading, harassing or coercive.
Rule 6
MILLION DOLLAR ROUND TABLE Code of Ethics (See also expanded MDRT Code of Ethics) (847) 692-6378 www.mdrt.org/ethics.html Hold in strictest confidence, and consider as privileged, all business and personal information pertaining to my clients' affairs.
Part 3
Always place the best interests of my clients above my own direct or indirect interests.
Part 1
Maintain the highest standards of professional competence … by seeking to maintain and improve my professional knowledge, skills and competence.
Part 2
Abide by and conform to all provisions of the laws and regulations in the jurisdictions in which I do business.
Part 7
Make full and adequate disclosures of all facts necessary to enable my clients to make informed decisions.
Part 4
Determine that any replacement of a life insurance or financial product must be beneficial for my client.
Part 6
NATIONAL ASSOCIATION OF INSURANCE AND FINANCIAL ADVISORS Code of Ethics (703) 770-8100 www.naifa.org/about_ethics.html To maintain my clients' confidences.
Section 3
To present accurately and honestly all facts essential to my clients' decisions.
Section 6
To perfect my skills and increase my knowledge through continuing education.
Section 7
To keep informed with respect to applicable laws and regulations and to observe them in the practice of my profession.
Section 9
[Not specifically addressed in this code.] To cooperate with others whose services are constructively related to meeting the needs of my clients.
Section 10
NATIONAL COMMITTEE ON PLANNED GIVING AND THE COMMITTEE ON GIFT ANNUITIES Model Standards of Practice (Revised April 1999) (317) 269-6274 www.ncpg.org/ethics_standards/model_stds.asp?section=7 [Not specifically addressed in this code.] It is essential to the gift planning process that the role and relationships of all parties involved, including how and by whom each is compensated, be fully disclosed to the donor.
Section III
The gift planner should strive to achieve and maintain a high degree of competence in his or her chosen area, and shall advise donors only in areas in which he or she is professionally qualified.
Section V
A gift planner shall fully comply with and shall encourage other parties in the gift planning process to fully comply with both the letter and spirit of all applicable federal and state laws and regulations.
Section IX
Compensation paid to gift planners shall be reasonable and proportionate to the services provided. Payments of finder's fees, commissions or other fees by a donee organization to an independent gift planner as a condition for the delivery of a gift are never appropriate.
Section IV
A gift planner acting on behalf of a charity shall in all cases strongly encourage the donor to discuss the proposed gift with competent independent legal and tax advisers of the donor's choice.
Section VI
SOCIETY OF FINANCIAL SERVICE PROFESSIONALS Code of Professional Responsibility (610) 526-2500 www.financialpro.org/About/CodeOfProfResp.cfm A member shall respect and safeguard the confidentiality of sensitive client information obtained in the course of professional activities. A member shall not divulge such information without specific consent of the client, unless disclosure of such information is required by law or necessary in order to discharge legitimate professional duties.
Rule R3.1
A member shall perform services in a manner that represents the interests of all those he/she serves, including clients, principals, partners, employees, and employers. A member shall disclose conflicts of interests in providing such services.
Canon 1
A member shall maintain and advance his/her knowledge in all areas of financial service in which he/she is engaged and shall participate in continuing education programs throughout his/her career.
Rule R2.1
A member shall refrain from giving advice in areas beyond the member's own expertise.
Rule R2.2
A member has the duty to know and abide by the local, state, and national laws and regulations and all legal limitations pertaining to the member's professional activities.
Rule R6.1
A member shall not engage in behavior involving concealment or misrepresentation of material facts.
Rule R1.1
A member shall act with patience, timeliness, and consistency in the fulfillment of his/her professional duties.
Canon 5