Guiding Principles

Use a mission statement, a vision statement and a code of
ethics to govern your firm’s actions.

By Frank C. Bearden, Ph.D., CLU, ChFC

A financial advisory practice is much like a boat in water: It needs a rudder to stay on course. The rudder allows staff to offer their services based on professional and ethical standards. The rudder has three parts: the mission statement, the vision statement and the code of ethics.

Mission statement
The mission statement reflects the work a practice professes to do, but it’s more than just that—it is an obligation. For example, the hypothetical firm Bryn Mawr Financial Planning Associates might have this as its mission statement: “We provide solutions for our clients’ financial problems.” This not only describes what the company does, it also states its reason for being in business.

To develop a mission statement, begin by considering what your practice does best—the key service you offer to clients. The more clearly you describe this, the closer you are to capturing your firm’s mission. Here’s an example:

Austin Financial Advisors, a fictitious firm, screens and offers financial products for its clients and provides financial planning. The company plans to begin a new promotion campaign and wants to rediscover its key services.

“We do a lot of things, but how can we wrap these into one description?” asks Rhonda Mackey, a managing partner at the firm. “Sometimes we end up just providing products, sometimes we simply help a client understand a problem through a financial plan, and sometimes we offer a second opinion on a financial product. In all events, we are helping a client solve his financial problems. Perhaps that’s our mission—to help clients solve their financial problems.”

Ron Matts, a partner in the firm, suggests this statement: “Austin Financial Advisors: We help you solve your financial problems, your way.” As he points out, “We do emphasize solutions that the client is comfortable with.”

Vision statement
The vision statement describes what an organization hopes to become by carrying out its mission. Consider again our hypothetical firm, Austin Financial Advisors. If its mission is to help clients solve their financial problems their way, what might be its vision? Let’s listen in on the discussion between two principals of the firm.

Ron’s view of the firm’s vision is: “Your guide in financing your dreams.” Rhonda first thought the image was a little optimistic, but then comments, “You know, in helping clients solve problems, what we’re really doing is providing guidance they can take or not take. Either way, perhaps we do want to be known as the advisory firm that provides guidance.”

Code of ethics
Drafting a firm’s code of ethics will usually follow the development of its mission and vision statements. The code will provide specific beliefs and behaviors the practice commits to in delivering service. A code of ethics is made up of three basic elements: principles (values) that the practice believes are important, rules of behavior that express how the principles should be carried out and examples of the rules. The principles grow out of the mission statement about the firm’s key service.

To develop a code of ethics, our associates at Austin Financial Advisors would have to ask themselves: “What principles are implied when we help clients solve their problems, their way?” A couple of important principles should come to mind immediately—the principles of honesty and integrity. They should also think about the principles of competency and fairness. When these principles are developed, rules and examples can be conceived.

A company’s mission statement, vision statement and code of ethics are in a state of constant change. New challenges and insights will sharpen the service a practice provides, its view of the future and its code of professional behavior. So the rudder of the practice is never quite finished and can never become irrelevant or unresponsive to the public it serves.

Frank C. Bearden, Ph.D., CLU, ChFC, is a field manager, financial advisor and agent in San Antonio, Texas, and a member of NAIFA-San Antonio. You may reach him at fcbearden@yahoo.com.