A Study of Recognizing Conflicts of Interest in Pending Financial Planning Engagements

Conflicts of interest (COI) are an ethical issue for financial planners. The problem addressed in this study is COI are difficult and expensive to remedy for client and professional. Remedies may involve financial loss to clients and litigation and damage to professional reputation for professionals. Hence, prediction of likely COI is preferable for client and professional. No empirical studies have been done to date regarding prediction of COI among professionals. This article describes a research study of the recognition by financial planners of likely COI in hypothetical pending engagements, as well as the influence of years in practice and financial planning credentials upon that accuracy. The study was sponsored by the College for Financial Planning.

At extensive literature review of the problem and related research is included in the pending manuscript. For copyright reasons with the publisher, this information will not be available until publication.  



Conflicts of interest (COI) are an ethical issue for financial planners because they impair professional judgment if not addressed. This article describes a quantitative, cross-sectional research study focused on recognizing a COI at the earliest possible time, when considering a pending engagement. Participants were 51 graduates of the Master of Science degree from the College for Financial Planning. In the first part of the study, participants considered three questions for each of six hypothetical pending engagements: likelihood of a COI, possible threat to professional judgment, and course of action to take. Important findings with implications for financial planning practice included lack of recognition of a COI involving service to family members, lack of association of the threat to professional judgment with a COI, and the unrecognized importance of avoiding or removing a COI. In the second part of the study, the influence of a participant’s time in financial planning practice and financial planning credentials was measured upon participant responses to each of the three interview questions. Regression analysis with optimal scaling was utilized. Important findings with implications for financial planning practice include the relationship between financial planning credentials and the recognition of a COI, when no COI was present in the pending engagement. A similar relationship was noted in the same pending engagement with course of action. This finding indicated possible confusion of a common or nuisance conflict with a COI.


This publication has been peer reviewed.
Publication Type: 
Journal Article
Frank C. Bearden
A question of ethics: Reflections on the DOL Fiduciary Rule. Advisor Today, 111(4), 11.
A question of ethics: The details often make the difference. Advisor Today, 111(2), 15.
Year of Publication: 
Journal, Book, Magazine or Other Publication Title: 
Journal of Financial Counseling and Planning
Association for Financial Counseling, Planning, and Education
Date Published: 
Sunday, November 1, 2015
Place Published: 
Alexandria, VA
Jing Jian Xiao
Boyer's Domain: