Philip Anderson
Philip Anderson spent most of his career in the brokerage business. He has worked 21 years at Stuart & Co as manager. According to him, in the brokerage industry, advisors need to provide unbiased financial advice but he realised that it was for the most part wrong. Indeed, company’s benefits are sometimes more important than satisfying clients expectations. The vision of being a broker in Stuart & Co appeared to be closer to the vision of Philip Anderson.
Effectively, Stuart & Co “was a firm that emphasized the development of long-term client relationships based upon rendering expert independent financial advice”. Although he truly enjoys his job, lately the expectations of his superiors have changes. The top management decided to incorporate specific products into the annual sales budgets of the branch managers. This new type of management is risky because according to Phil, the advisors must give unbiased financial advice to the clients if they want to have long-term relationships with them.
In that case they risked the many long-term relationships with clients that they had worked hard to develop. In order to make sure that the branch managers are going to respect the new type of management and consequently the new objectives, the top management has implemented a system of cost of controls which consist in cash bonuses. The purpose of this cost of controls is a higher probability that people will both work hard and direct their energies to serve the organisation’s interest.
However, this new type of management doesn’t take into account the ethical concerns. Indeed, the implementation of this new strategy does not truly respect the ethical principles. Stuart & Co no longer seeks to meet customer expectations but it’s trying to improve its own profits no matter what. The specific products and services sold to clients should be dictated by the needs of those clients and not by the needs of profits.
In its perpetual search of profit, Stuart & Co is willing jeopardize many long-term relationships with clients and to probably sacrifice some of its actual clients. Moreover, the cost of controls are involved in maintaining these acts which are against the ethical principles. The old bonus system was based upon overall branch revenues, growth in he number of ties or relationships developed with each customer, and the number of business referrals to other branches. While the new system takes into account the sales of specific products.
Consequently, even though Philip Anderson branch is one of the largest in terms of clients, sales volume and net profits, he is no longer rewarded for that. To conclude, in this case there is a completely discrepancy between costs of controls and ethical concerns. Knowing Philip Anderson current situation, in his shoes I will try to adhere to the firm directives even though this directives are against his principles. Indeed, he his 54 years old which means that if he is not respecting the directives it is likely, eventually that he gets fired.
Moreover, there are too much things at stake: his wife his retired, his children are still at school, he has just bought a new house, a new car… His job is too important for him, for his whole family, for his financial security to risk it. Furthermore, if he gets fired it will be difficult for him to find a new job knowing his age. We can say he has done his best to keep up with his ideas and principles but now the risk is too important for not taken it into account.
