The Ethics Problem in Financial Services (Dr. Moira Somers & Philippa Hann)

**Benjamin Felix** (0:00)
This is a good person doing bad things.

**Philippa Hann** (0:02)
People who have lots of money are amazing prey for people who want to get them.

**Dr. Moira Somers** (0:09)
And I mean, I met some psychopaths.

**Benjamin Felix** (0:15)
Welcome to episode 425 of The Rational Reminder Podcast. Today we're joined by Philippa Hann and Dr. Moira Somers, who are co-authors of a new book, The Fault Lines of Finance, Understanding and Preventing Financial Misconduct.

**Cameron Passmore** (0:29)
Philippa Hann is a lawyer who's spent two decades been suing financial advisors, including over a thousand claims on behalf of British steelworkers, who lost their pensions. And Dr. Moira Somers, longtime friend of ours, is a clinical neuropsychologist who coaches financial professionals on the human side of money. And I'm sure many listeners will remember her from episodes 45 and 92, when she joined us with Dave Ketch.

**Benjamin Felix** (0:56)
Yeah, longtime friend of the firm and now a three-time guest. Not too many of those out there.
We talk in the episode about what leads people to do bad things with other people's money, even if they're good people, even if they didn't mean to be bad, what leads them to do that? And we talk about why even someone who thinks that they're generally ethical and moral doesn't mean that they're safe from falling down that bad path. We also talked about how investors can try to identify where those risks lie when they're working with professionals.

**Cameron Passmore** (1:31)
Let's stick around until the end and you'll hear our thoughts on the conversation. So for now, let's get to the episode.

**Benjamin Felix** (1:42)
Dr. Moira Somers, welcome back to The Rational Reminder Podcast, and Philippa Hann, welcome to The Rational Reminder Podcast.

**Dr. Moira Somers** (1:48)
Thank you.

**Philippa Hann** (1:50)
So good to be here.

**Benjamin Felix** (1:51)
We're super excited to be talking to you guys about your new book, The Fault Lines of Finance, Understanding and Preventing Financial Misconduct, which Cameron and I both thought was fantastic from our perspective as practitioners. We're very excited to be talking to you about the book.

**Philippa Hann** (2:05)
Thank you.

**Benjamin Felix** (2:06)
To kick it off and give listeners some context and background, what is financial misconduct?

**Dr. Moira Somers** (2:13)
I would describe financial misconduct. In my opinion, it is doing bad things with other people's money. We have this concept in the book of other people's money because it's really important when you are working in finance that you remember it's not your money.
So it's doing bad things with other people's money, whether that's trying to take it for yourself or guiding or advising somebody to direct their money in a way which is just not in their best interests.

**Cameron Passmore** (2:42)
What motivated each of you to write a book about financial misconduct?

**Dr. Moira Somers** (2:46)
I spent 20 years suing financial advisors, wealth managers and banks. In doing that, I kept asking myself, when you're looking on the inside of somebody else's inbox, which is what you do during the disclosure process, and you're reading all the threads, you're seeing the decisions in real time if you like, the memos, the transcripts of conversations, the emails that are going on, you've got your client giving you their witness statement. When you get to court, you've got the other side giving evidence as well. You've seen their witness statement. It was easy in my early years, when I was in my late 20s and I'm running these big litigation cases, to almost categorize people in a kind of Disney way of, these people are good and these people are bad. So I always happen to be acting for the good guys against the bad guys. It's not that simple. And so as I went through my career, I just kept seeing the same things. I kept having conversations with people on the other side of a courtroom or the other side of a mediation room. And I mean, I met some psychopaths, but largely they were not psychopaths. And I just had this niggling question of why did it happen? There was an easier option. There was something that was clear that they should have done, and they didn't take it. I wanted to understand why.
But when you're a lawyer, no one's paying you to ask questions like that, so I had to wait until I stopped being a lawyer. When I stopped being a lawyer, I just had this desire to answer that question. Why do good people do bad things with other people's money? And I had also been at the top of my firm. I was an equity partner. I was on the board. I was on the executive committee. I was running a large division of 120 lawyers. I had several tens of million pounds that I was responsible for.