Politically Biased, Ethically Compromising & Failing Clients

By: Progressive Advisors’ Movement, June 2023

Progressive Advisors’ Movement research has revealed major challenges in how the private wealth industry approaches tax – that it is politically biased, ethically compromising and
failing clients.

The Progressive Advisors’ Movement is a movement of current and former private wealth industry practitioners committed to transforming the industry to become an enabler – rather than a hindrance – to a more equitable and regenerative society. Facilitated by the Good Ancestor Movement, scores of private client lawyers, accountants, wealth planners, investment managers, tax advisors, private bankers and more have been gathering anonymously and collaboratively towards this aim and will continue to do so.

The research has been informed by:
● input from over 100 current and former practitioners;
● direct input from a number of private wealth industry clients; and
● a piece of communications analysis undertaken by linguistic experts into communications practices across 100 major firms.

The study calls for a wide-reaching series of changes to industry practice in order to uphold public trust in the sector and ensure that we better serve clients, staff and society.

The key findings of the study were:

1. Service: The industry is failing to assess and to respond to client views on tax. Within industry, there is a presumption of client values and client intent. For many clients that do manage to communicate their values, there is a failure to adequately translate values into services. There is an insufficiency of assessment tools to understand client values and a lack of training in how to serve a broad client base.
2. Culture: There is a strong anti-tax culture within industry that impacts client services and communications. The industry uses homogenous ‘anti-tax’ language in its communications and is too quick to default clients into products and services focused only on tax reduction and tax-led structuring.
3. Failing Clients: Clients with a stronger sense of citizenship are being failed by the sector. There is a particular ‘blind spot’ within services provided to clients who see tax payments as part of a broader civic duty and a tool to reach a more equitable society. Many clients face active resistance from industry when trying to explore such approaches.
4. Staff: The ethical ‘norms’ of current behaviour on tax are costing the industry. Significant numbers of staff are considering leaving the industry or wish they could because of a feeling of being ethically compromised in the work they are doing.
5. Politics: The industry is highly political in its views on tax and this informs government lobbying. There is a strong sense of ‘anti-tax’ politics within industry that informs relationships with regulators. The sector is seen as playing a role in lobbying government in pursuit of lower taxes for wealthy clients. It is also seen as failing to fulfil any potential role in supporting government to identify where tax loopholes exist, or where regulations are being used beyond their intended purpose.

These conclusions may not be universally true of all advisors or firms but each represents a definite pattern that needs addressing. It is clear that the private wealth industry has to change and to modernise in order to meet the expectations of its own staff and clients, as well as those of society more broadly.

We are calling for urgent action and have identified four innovations that we believe could make a transformational difference to the challenges identified above.

Progressive Advisors’ Movement