Recent misconduct cases, including Shield and First Guardian, have once again brought attention to challenges within the financial advice profession.
Whether it's inappropriate sales tactics, inadequate due diligence, misrepresentations to clients or more serious breaches of trust, these cases taint the reputation of so many financial advisers out there who are doing great work and are genuinely committed to doing right by their clients.
Perhaps this is delusional of me, but I just don't believe anyone wakes up and thinks, "What misconduct can I get away with today?" These cases involved professionals who gradually slipped down a slope of poor decisions, each one rationalised and justified along the way.
So, instead of wondering how this could happen, maybe we should ask, “How do we ensure this doesn't happen again?" And for the practice owners and senior leaders reading this: “How do we create an environment where good people continue to make good decisions, even when faced with pressure, opportunity or just a little bit of good old-fashioned temptation?"
The neuroscience behind why good people can make bad decisions
To understand how we can prevent misconduct, we need to understand how our brains can lead us astray. There's fascinating neuroscience behind why intelligent, well-intentioned professionals can end up making decisions they would have found unthinkable just months earlier.
When we make a slightly questionable decision, our brain immediately goes to work to reduce the discomfort of cognitive dissonance – or, the mental stress we feel when our actions don't align with our values. The anterior cingulate cortex, which monitors conflicts between our beliefs and behaviours, triggers this discomfort.
Effectively, our negative affect system in the brain is now feeling pretty uncomfortable. To resolve it, the brain’s executive centre then jumps in with some swift internal negotiations to make our actions seem reasonable.
You may have heard of confirmation bias: basically, once you've made a decision, your brain actively seeks information that confirms you were right and filters out evidence that suggests otherwise.
This isn't a conscious process. Your brain literally rewires itself to support your decisions. Each time you rationalise a small compromise, you're strengthening neural pathways that make the next compromise easier to justify. It's like creating a mental highway that becomes smoother and faster each time you use it.
This is an important part of belief formation and confirmation. And here enters what is known In neuroscience circles as the double reinforcement system of beliefs. Essentially, every time this justification process occurs, we are deactivating the negative affect system – which feels good.
And here’s a double clincher: we also get a hit of dopamine (associated with our reward system) for doing this justification.
So, in a nutshell, not only is the negative feeling of the dissonance gone but the reward for doing it feels great. (Obviously not for the client, though.)
The scary part is that this process feels completely rational from the inside. The person making increasingly poor decisions genuinely believes they're doing the right thing. They're not lying to themselves; their brain has actually convinced them that their rationalisation is reality. Yikes!
This is why relying on "good people will make good decisions" isn't enough. Without explicit cultural guardrails, even the most ethical professionals can find themselves on a slippery slope they never saw coming.
Why your current approach might need some tweaking to avoid the same fate
Most financial planning practices approach culture like it's a set-and-forget campaign. They develop some high-level values, maybe put them on the wall or website, run a workshop or two and then assume everyone's on the same page. This approach fundamentally misunderstands what culture actually is.
Culture isn't a poster on the wall or a one-time training session. It's the daily accumulation of every decision, every conversation and every action taken by every person in your organisation. It's what happens when no one's watching. It's how people make decisions when they're under pressure, facing opportunity or dealing with ambiguous situations.
If you don't deliberately shape your culture, it will shape itself – and it might not develop in the direction you want. What you ignore, you accept. And if slightly wrong behaviours are regularly allowed to slide, they don't just maintain the status quo; they snowball, and that slippery slope can get a lot more slippery very quickly.
Think about it this way: every time a questionable decision goes unaddressed, you're sending a message about what's actually acceptable in your organisation, regardless of what your official values statement says. Your team isn't reading your values poster – they're reading your actions, or lack thereof.
How to build a culture framework that actually works
A proper culture framework goes far beyond values statements. It needs to be formulated and clearly articulated rather than left to develop organically. Here's what this looks like in practice:
Make culture concrete and actionable
Your culture should clearly inform how people go about their business every day and how they make decisions. Instead of vague values like "integrity" or "client-first," you need specific behavioural indicators.
What does integrity look like when a client asks about a product that pays higher commissions but isn't the best fit? What does client-first mean when you're behind on monthly targets?
Embed culture in daily operations
Culture should form part of KPIs and performance reviews. When someone demonstrates the desired culture in action, they should be recognised and rewarded. When they don't, it should be addressed swiftly and directly. This isn't about punishment; it's course correction before small issues become big problems.
Leadership must lead by example every single day
Senior leaders set the cultural tone through their daily actions, not their annual speeches. When leaders consistently demonstrate the behaviours they want to see, it creates permission and expectation for others to do the same.
When they don't, it creates confusion and mixed messages that undermine even the best-intentioned culture initiatives.
Create regular check-ins and accountability
Culture requires ongoing attention, not sporadic campaigns. Regular team discussions about how decisions align with cultural values, case study reviews of challenging situations and honest conversations about where you're succeeding and struggling will keep culture front and centre.
Address the many shades of grey
The biggest cultural breakdowns don't happen in black-and-white situations. Instead, they often happen in the “grey areas” where the right choice isn't immediately obvious. Your culture framework should specifically address these ambiguous situations and provide clear decision-making criteria.
Interrupting the rationalisation process
Remember that neuroscience about rationalisation? A strong culture framework acts as an external interrupt to those internal justification processes. When someone starts down the path of rationalising a questionable decision, explicit cultural standards create cognitive friction.
Instead of the brain's natural tendency to seek confirming evidence, a robust culture framework normalises the process of people actively considering alternative perspectives. It's like having a series of speed bumps on that mental highway that makes people slow down and really think about where they're heading.
When teams regularly discuss challenging situations and how they align with cultural values, it creates psychological safety around admitting uncertainty and seeking input before making decisions.
Why acting now matters more than ever
Every misconduct case makes it harder for ethical professionals to build trust with clients and grows the mountain of regulatory compliance we all have to navigate.
But here's the opportunity – practices that proactively build strong culture frameworks aren’t simply avoiding scandal; they’re creating competitive advantage.
Clients can sense the difference between organisations that talk about values and those that live them daily. Team members are more engaged, more confident in their decision-making and more likely to stay with organisations where they feel proud of the culture they're helping to create.
The cost of getting culture wrong isn’t confined to regulatory penalties. It gradually erodes trust, and that takes years to rebuild. Conversely, getting culture right costs far less – and the returns compound over time.
Culture is process, not a campaign
Misconduct rarely starts with someone deciding to be unethical. It usually starts with small compromises that seem reasonable at the time, in organisations where culture was assumed rather than actively managed.
So, don’t treat your culture framework as a nice-to-have that’s bolted on to your business strategy. It's your first and most important foundation that sets the tone for everything from there.
The good news is that you don’t need to start from scratch or implement everything at once. You can start by simply making your current cultural expectations explicit, creating regular opportunities to discuss how decisions align with those expectations and consistently modelling the behaviours you want to see – especially in times of pressure, difficult choices and ambiguous situations.
Advisely Partner
