Damian Fantato  

Morals trump money

Damian Fantato

Damian Fantato

A group of economists once conducted a study on some Swiss villagers, asking them if they would accept a nuclear waste site in their neighbourhood.

Surprisingly, the villagers voted in favour, because they reluctantly recognised the site’s importance to their country. But support for the scheme dropped by 25 percentage points when it was suggested the government could compensate them financially for the disruption.

Similar studies have also found that blood donation systems that rely on civic duty – like in the UK – receive more support than those that pay for donations, like in the US.

This, American philosopher Michael Sandel has claimed, shows that doing what is right can often be more powerful than doing what is most financially rewarding.

What does this mean for advisers? For a start it goes some way towards showing what people value when the worst comes to the worst.

Many advisers will already know this – after all, they have been spending the past few months reassuring their clients and holding hands through the recent financial turmoil.

Indeed, advisers seem to have a greater sense of this than the government. It has made fairly clear when businesses will be able to reopen, but has been much quieter on when friends and families might be able to interact with each other in some modest way – without the use of technology.

But advisers would do well to take these lessons beyond the coronavirus pandemic.

The growth of environmental, social and governance investing suggests morals do sometimes trump money. It might seem strange to take the finance out of financial advice, but the growth of these practices will be good for the profession and for clients.

After all, many clients seek reassurance that all is in hand, and that is something money cannot buy.

damian.fantato@ft.com