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The Case for Investment Advising as a Virtue-Based Practice

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Abstract

Contemporary virtue ethics was revolutionized by Alasdair MacIntyre’s reconfiguration using practices as the starting point for understanding virtues. However, MacIntyre has very pointedly excluded the professions of the financial world from the reformulation. He does not count these professions as practices, and further charges that virtue would actually hinder or even rule out one’s pursuit of these professions. This paper addresses three tasks, in regard to the financial profession of investment advising. First, the paper lays out MacIntyre’s soon-to-be-published charges against the investment world, as specified to this profession. Second, it sets forth the role function of investment advising and shows that it does possess internal goods—the crucial aspect of practices disputed by MacIntyre in this case—including goods of production and goods of performance. Third, it demonstrates that this function, and the goods tied to it, cannot be achieved apart from the virtuous pursuit of the profession, thereby showing that MacIntyre’s charges are mistaken. Investment advising is shown to be a virtue-based practice, and the groundwork is laid for showing that other financial professions are so, as well.

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Notes

  1. I realize that the work of many financial advisors, especially those who work for large investment firms, includes marketing securities, both to clients and to potential clients. But this salesmanship is not part of the advisor role, itself, as evidenced by the fact that independently employed advisors do not engage in it. So in this argument, I will not deal with such sales aspects of the job. Whether they are consistent additions to the advisor role, or whether they create conflict for it, are questions for another time.

  2. MacIntyre (forthcoming), p. 10, “The irrelevance of ethics” (draft copy; usage granted by author).

  3. Wyma and Senefeld, Streetsmart ethics: Connecting what’s right with what’s smart on Wall Street (manuscript under consideration for publication).

  4. MacIntyre (1984), p. 187.

  5. Ibid., p. 190.

  6. Ibid.

  7. Ibid., p. 187.

  8. Brief Summary of the Dodd–Frank Wall Street Reform and Consumer Protection Act.” Accessed 1 Dec (2013).

  9. The reader may examine a more comprehensive set of rules and standards for the profession at FINRA’s website: http://www.finra.org/Industry/Regulation/FINRARules/

  10. Ibid., p. 189; MacIntyre (2013), personal correspondence.

  11. MacIntyre (2010), personal correspondence.

  12. MacIntyre (2013), personal correspondence.

  13. Ibid.

  14. MacIntyre (1984, p. 193).

  15. “The irrelevance of ethics,” pp. 6, 10.

  16. Ibid., p. 5.

  17. Ibid.

  18. Ibid., pp. 6–7, 10.

  19. Ibid., p. 7.

  20. Ibid.

  21. Ibid.

  22. Ibid.

  23. Ibid., p. 8.

  24. Ibid.

  25. Ibid., p. 6.

  26. Ibid., p. 20.

  27. Ibid., p. 8.

  28. Ibid., p. 20.

  29. Ibid., p. 9.

  30. Ibid., p. 6.

  31. MacIntyre (1984), pp. 203–219.

  32. “The irrelevance of ethics,” p. 6.

  33. Ibid., p. 9.

  34. Ibid.

  35. Ibid., p. 8 [emphasis added].

  36. MacIntyre (1984), pp. 189–190.

  37. MacIntyre (2013), personal correspondence.

  38. MacIntyre (2010), personal correspondence.

  39. MacIntyre (1984), pp. 190–191.

  40. Ibid., p. 196 [emphasis added].

  41. Ibid.

  42. Ibid., p. 184.

  43. Ibid., p. 194.

  44. Ibid., p. 190.

  45. Ibid., p. 191.

  46. Ibid.

  47. Ibid., pp. 188–189.

  48. Ibid., pp. 190–191.

  49. Ibid., p. 189.

  50. Berlin (2000), p. 856.

  51. Hobbes (1985) Leviathan, chaps. 18–29.

  52. MacIntyre (2010), personal correspondence.

  53. MacIntyre, “The irrelevance of ethics,” p. 12.

  54. Ibid.

  55. Ibid.

  56. Ibid., p. 13.

  57. MacIntyre (1984), p. 184.

  58. MacIntyre (2013), personal correspondence.

  59. Cf. Gordon (1999).

  60. A chapter of Wall Street history.” Harper’s Weekly, 11 July (1863, p. 434).

  61. Gordon (1999 ).

  62. MacIntyre (1999), p. 139.

  63. Ibid.

  64. Ibid., p. 130.

  65. Cf. Gordon (1999), p. 254, on the founding goals of Merrill Lynch.

  66. MacIntyre (1999), p. 139.

  67. Ibid., p. 150.

  68. Aristotle (1985 ), Nicomachean ethics, 1155b30–1166a30.

  69. MacIntyre, “The irrelevance of ethics,” p. 5.

  70. Wyma and Senefeld. Streetsmart ethics, draft pages, pp. 217–218.

  71. MacIntyre, “the irrelevance of ethics,” p. 8.

  72. Wyma and Senefeld, Streetsmart ethics, p. 218.

  73. MacIntyre (1984), p. 194 [emphasis added].

  74. MacIntyre may disagree, when it comes it capitalistic business, including of course, financial advising. In personal correspondence (2013), he writes that, “…investment under capitalism has to go the more profitable enterprises. Many businesses are dedicated to the achievement of goods internal to the productive practices in which they are engaged. But their pursuit of those goods is far too often in conflict with their need to be profitable. The long-term histories of firms originally dedicated in a very striking way to the achievement of such goods…[are] instructive.”

    Again, this is an issue far too large for this paper. Here, I can only state that I disagree. I believe there are ways to maintain a practice according to virtue, within the context of capitalistic business.

  75. This section is partially adapted from Streetsmart Ethics, which treats in detail various virtues involved in investment advising, including how those virtues enter into successful responses to the profession’s ethical problems, including insider trading and others.

  76. MacIntyre (1999), p. 8.

  77. Ibid., p. 127.

  78. Ibid., pp. 127–128.

  79. Fitzgerald (1998), pp. 120–146.

  80. Ibid., p. 130; Scruton (2008), p. 26.

  81. Fitzgerald (1998), p. 130.

  82. MacIntyre (1984), p. 194.

  83. MacIntyre (1999), pp. 88–89, (1990), p. 63.

  84. MacIntyre (1984), p. 191.

  85. Galleon boss Rajaratnam found guilty of insider trading (2011). BBC News Business.

  86. MacIntyre (1999), p. 150.

  87. MacIntyre (1999), p. 91.

  88. Ibid., p. 193.

  89. Lambeth (1992), p. 84, attributed to Roy Peter Clark.

  90. Ibid., p. 73.

  91. Ibid., p. 72.

  92. Ibid.

  93. I’m grateful to Alasdair MacIntyre for permission to use his so-far unpublished work, and for his correspondence with regard to my argument. I also express my gratitude to the editors of this journal, and the reviewers, Ted Malloch and Thomas V. Morris, for their helpful advice.

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  1. Whitworth University, Spokane, WA, USA

    Keith D. Wyma

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Wyma, K.D. The Case for Investment Advising as a Virtue-Based Practice. J Bus Ethics 127, 231–249 (2015). https://doi.org/10.1007/s10551-013-2025-3

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