First, do no harm.

For the first issue of this newsletter lets go big picture.

Step back. Now step back again.

From there, look over towards the financial advice profession. It looks a whole lot different from a distance – much better than we ever could have imagined from the depths of:

- client meetings;

- compliance documents;

- and deciding whether to sell Qantas shares now, or next week.

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From a distance, we see a profession that uses financial skills to give advice in a way that doctors use health skills.

Strategic advice

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Product advice

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Now, doctors have not been a profession for so long that they are without fault. They only separated from the Barbers (yep, the hair cutters and shavers) back in 1745. But still long enough that we can learn a lot from their journey to become the respected profession they are today.

For this first newsletter, let’s consider first principles.

Do no harm.

The first principle of the medical profession.

And surely, the first principle of every profession.

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In a practical sense this means that a doctor would in theory prefer to do nothing, than do something that could harm their client. This could be why the most common recommendation for any of the colds or coughs I’ve asked doctors about is ‘if it’s still there in 2 weeks, come back’.

Not necessarily helpful.

But definitely not harmful either.

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When we apply this to the financial advice profession, it explains why so often advice to clients includes ‘keep on doing what you’re doing’.

As a profession, financial advisers excel in ‘doing no harm’ when it comes to recommendations. Each of the instances where harm was caused, we know about it, as it is all over the TV.

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But there are some areas of financial advice where ‘do no harm’ could be highlighted a little more.

A key issue for first doing no harm is protecting client data and privacy.

There are a couple of key ethical issues here to unpack:

1.?????? Client data storage

2.?????? Using AI

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Let’s unpack this.

1.?????? Client data storage

I talk to millions of financial advisers. Ok, it’s not millions, but it’s lots. And I am often reassured that their client data is ‘in the cloud’, and that they have IT professionals who contract to checking data security and whatnot.

This may well be true. Unlikely. But it might be true.

The reality is, that if Medibank and Optus can get hacked, so can Australia’s most amazing financial advice practices.

This ties in to doing no harm because first and foremost, the privacy of financial data (and health data …. Insurance applications anybody?) is essential for client wellbeing.

When firms get hacked and personal, private and sensitive information becomes available in the never-never ….. victims feel violated. And with good reason.

So in order to ‘do no harm’ at the very basic level, we need to spend a heap of effort in setting up safeguards for client data.

Standard 1 of the Code of Ethics says follow the law, and the Privacy Act 1988 is a great starting point.

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2.?????? Using AI

All the research suggests AI as a tool is something that can provide a powerful level for humans to use to create faster and better client outcomes. Ben Neilsen even wrote a journal article on this exact topic – so it’s even been written about in financial advice.

The issue with AI (at the moment of writing …. It does change quickly) is that the data we put in does go somewhere.

It doesn’t stay on the computer.

That’s how AI tools are continually refined. They are continually learning from the information they receive in order to serve better.

The Australian Defence Force had to be told to stop using Chat GPT as the information given to the AI was not secure. Duh.

Our client’s data is just as important.

So first, we need to figure out how to leverage tech like AI to not only build more efficient businesses, but also keep our client’s data as private as it should be.

We all know that using tools like Chat GPT is not a breach of the Privacy Act (nor Standard 1 of the Code of Ethics), but the principle of ‘do no harm’ needs to be considered within the broader context of the profession.

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First, do no harm.

Second, help.

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-????????? Katherine

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