Ethics: Personal Fundamentals

Page 5 of 9

Being Competent and Objective

Competency

Competence is the quality of being competent: adequacy; possession of required skill, knowledge, qualification, or capacity such as when an employer hires an employee based on his or her competency to perform the job, for example, an executive assistant. It is also competency that the employer can provide sufficient income in order to furnish the necessities and modest comforts of life. It is the legal capacity of the applicant to meet base qualifications such as minimum requirements of age, soundness of mind, and citizenship, to name a few.

This premise applies to both general practitioner and specialist agents. In both instances, clients have the right to expect a certain minimum level of competency. Aside from obtaining the requisite licensing, agents must strive to acquire the knowledge necessary to provide competent service and advice.

Knowledge & Skills

Professional producers are required to provide competent services to clients and customers, which includes maintaining the necessary knowledge and skill to be able to provide those services honestly and with integrity.

Agents are expected to know the basics and be able to provide services commensurate with that knowledge. Competent does not mean expert. It also does not create a specific or rigid methodology for providing advice or service to clients. Instead, competence refers to a minimum level of ability to provide effective advice and service.

However, if an agent claims to be a specialist, they are then held to a higher standard of knowledge and competence. For example, if someone claims to be an estate planner (as opposed to a general financial planner), clients would be entitled to expect a higher level of competence and knowledge in that area.

Nobody knows everything. Is that a fair statement? If that's the case, then how can an agent be competent to provide services to every financial advising client? How can an agent be competent to meet every client's every need? This is a question without a quick answer.

Imagine an agent has been advising and planning for his or her clients for over a decade. Imagine he or she has studied and updated his or her knowledge consistently over the years. The agent has constantly kept up to date beyond the minimum continuing education work, periodicals, trade journals, and on and on. Still, agents will often find themselves running into situations and cases that have a component they're not up to speed on.

The agent is not alone. There are many other agents in the same boat.

It is also true that an agent is considered competent when they have developed, attained, and maintained a level of knowledge and skill adequate to assist a client, as well as the agent being able to apply that knowledge competently.

It is also accepted that one is competent when they have the wisdom to know when they are in 'over their head' in a particular situation or component of a situation. It is then the responsibility of the agent to bring in outside specialists in the deficient area to work with them on the case or refer the client to another person who has the specialized knowledge and competency. This, too, is competency, although many, out of ignorance, may see it as an indication of overall incompetence. However, it is not.

We have an ongoing commitment to improve in all areas of our profession. Even though someone has earned advanced designations and all its knowledge, and has satisfied qualifications to practice advanced financial planning, there is still a need to continually learn, review, and practice the art and science surrounding the financial arena.

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Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This material is intended as a general guideline and might not apply to a specific situation. The authors, LunchTimeCE, Inc., CEfreedom, and InsuranceEthics101.com, and any organization for whom this course is administered will have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this course.