Article Originally Published on AdvisorPerspectives
Monday is Memorial Day, the day each year we recognize the men and women who died in service of their country in the armed forces. Its predecessor, Decoration Day, started after the Civil War and was expanded to include WW I and II. Congress made Memorial Day a federal holiday in 1971.
Memorial Day weekend launches the start of summertime. With the experience of the withdrawal from Afghanistan still near and the fate of Ukraine just ahead, it raises larger questions about leadership in the armed forces. How are they viewed?
This is a direct lesson about leadership, honesty and ethics in finance. The Gallup Poll has measured how Americans view the honesty and ethical standards of people in different fields since 1976.
It measures the highest ratings against the lowest ratings. The net (positive minus negative) ratings are revealing. At the very top in 2020 or 2021, were nurses, at plus 78 points.
Medical doctors (59), grade-school teachers (53), pharmacists (57) and military officers (53) lead near the top.
Near the bottom were stockbrokers (-16), insurance salespeople (-22), and car salespeople (-34).
Most of these professions are visible to and interact with the public, but not military officers. Of course, officers put soldiers and themselves in harms’ way. Stories from Afghanistan and Iraq are recent and vivid.
The entrance requirements and demands to succeed at the United States Military Academy at West Point are legendary. A key demand at West Point is to follow its honor code.
West Point’s cadet honor code states: “A cadet will not lie, cheat, steal, or tolerate those who do.” To articulate this is core at West Point and what it means to be a military officer understates the case.
“Character development is the most important thing we do at West Point. It is critical to building leaders for our Army,” said Superintendent Lt. Gen. Darryl A. Williams, “The tenets of honorable living remain immutable, and the outcomes of our leader development system remain the same, to graduate Army officers that live honorably, lead honorably, and demonstrate excellence. …We demand nothing less than impeccable character from our graduates.”
For West Point, putting character development first is, especially now, important. The military academy experienced its own crisis in a cheating scandal during Covid.
Here is a thought experiment. The post-COVID finance industry conference schedule is in high gear. Imagine if a CEO of a top finance brand went off script and followed the lead of Superintendent Williams. Imagine if he or she followed the example of Ronald Reagan. The president rejected all expert advice and in 1987 in Germany said, “Mr. Gorbachev, tear down this wall.”
The cadet honor code shows that speaking candidly about the state of character of the country, industry or company as “the most important thing” to do in order to offer a parallel opportunity. There are some who are urging finance industry leaders to do so.
One year ago last week (May 20, 2021), in his first public statement for retail investors, SEC Chair Gary Gensler spoke to an audience of 1,700 at the FINRA annual conference. His remarks are worth recalling:
Every day I am animated by working families and what the SEC means to them… I hope that you too — the people on this call are animated by the investing public… Thus best interest means best interest and best execution means best execution. So if you are asking a lawyer, accountant, or advisor if something is over the line, maybe it is time to step back from the line. Remember that going right up to the edge of a rule or searching for some ambiguity in the text or a footnote may not be consistent with the law and its purpose…. There is a reason why the ’33 Act was called the Truth in Securities Law. Telling the truth matters. So again, think about the spirit of the law. It’s about protecting investors.
Protecting the country. Protecting investors. It is about character.
Memorial Day deserves the great recognition it gets. Remembering the service of those who died for our country is a civic duty. This includes remembering, doing and acting in a manner that there is no doubt the character of military and finance leaders must be first.
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