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Finding Purpose in Finance

By Future of Finance, Integrity, Principles, Purpose of Finance No Comments

Defining finance is akin to defining nature itself: its functions and complexities are so broad in influence that it almost becomes too difficult to assign a straightforward definition. With businesses and people across the world threatened by the new coronavirus delta variant, companies going public at record rates, and new innovative solutions in every industry, the need for financial solutions has never been more apparent. As we see these recent developments and dynamic future trends, we must return to the basics and ask ourselves, what is the purpose of finance?

 

It can be easy to view the discipline as a means of financiers shifting around capital. Another view is that finance allows companies and individuals to progress in their endeavors, fueling the idea that finance “makes the world go round.” On a fundamental level, finance is the process of managing and raising money, but there is so much more to it.

 

Why Do We Need to Understand Finance’s Purpose?

As with our personal ambitions or in traditional altruistic lines of work, purpose drives action. But it is deeper than that. As Mission co-founder Bård Annweiler astutely states in Point of Purpose, purpose is the core of everything. Purpose gives us reason to work toward a cause and stay motivated. It allows us to create our identity, set goals, and communicate effectively. Purpose is our meaning in life.

 

The same can be applied to finance, and some would even argue that it is more important in finance considering the sheer impact it has on businesses, industries, and most importantly, people. By understanding the purpose of finance, we can truly maximize our role in the industry and orient its functionality to optimize for success. We can innovate beyond the imaginable, achieving feats at a scale never seen before. That said, when we lose purpose, we lose direction, which has dramatic ramifications when matters pertain to finance.

 

So, What is the Purpose of Finance?

In a broad sense, the purpose of finance is to be a means to provide and scale solutions. It allows businesses to grow, employ new workers, and build communities. It ensures that entire institutions remain intact and avoid devastating collapse. In this sense, finance is the mechanism which steers the direction of society at large. When viewing finance and its purpose, we must look past the idea that finance is solely about capital; rather, it is about how capital will impact people.

 

This is why ethics and morals are essential when applied to finance. With so much influence on the direction of society, it is in our hands to determine where society heads. In other words, it is clear that finance stewards capital which allow companies to grow, but how companies grow and which companies grow are determined by individuals’ decisions. This includes which industries we invest in and how well-run the companies we finance are. Additionally, with so many incentives linked to short-term gratification, it is easy to sometimes sacrifice our integrity or judgment when making decisions. This is why having values influence or even guide our decision making is of the utmost importance: when we are grounded in our morals and a general desire to make a positive impact, then not only will we benefit others, but we will benefit personally as well. The data supports this line of reasoning too. According to the McKinsey report “Profits with purpose: How organizing for sustainability can benefit the bottom line” by Sheila Bonini and Steven Swartz, “an investment of $1 at the beginning of 1993 in a value-weighted portfolio of high-sustainability companies would have grown to $22.60 by the end of 2010, compared with $15.40 for the portfolio of low-sustainability companies. The high-sustainability companies also did better with respect to return on assets (34 percent) and return on equity (16 percent).” Logically, this makes sense. By investing in our future and steering society in a beneficial direction, we are driving innovation as well as positioning ourselves for long-term success.

 

When we either forget the monumental consequences of our actions and finances, or when we have a poor use of judgment while stewarding capital, we have the potential to hurt millions of people. A classic example is the 2008 Financial Crisis: with a misalignment of incentives and a series of internal seemingly harmless manipulations in banks, employees were motivated by short-sighted decision-making. While the financial services industry was by no means the sole contributor to this financial and housing bubble collapse, even with significant governmental intervention, unemployment still rose to 10 percent and about 3.8 million Americans lost their homes due to foreclosure. In this sense, we lost sight of the purpose of finance. We lost sight of how we could harness our work to benefit the greater good. We lost sight of the impact our work has on society as a whole.

 

At a technical level, finance’s purpose is clear: to manage, raise, and invest capital; however, on a human level, which is arguably far more important, it is up to us to define its purpose. It is easy to become complacent in our understanding of finance’s purpose by viewing it solely from a technical perspective; doing so makes the job easier and more straightforward. Once we add purpose to the equation, however, each action we take has more weight, but we can also help others and ourselves more with this external understanding. With ethics and morals ingrained in our decision making, the purpose of finance soon becomes to steward capital for the greater good.

 

Going Forward

So, by understanding the purpose of finance and how consequential our actions are within this broad space, what can we do moving forward? On a macro level, institutions and governments can invest in solutions that are sustainable and benefit communities.

 

On an individual level, there are steps we can take to maximize finance’s purpose:

 

  • If you do not work in the financial services industry, seek to understand how finance impacts your life – you will find it is much more involved than expected. With this understanding, you will not only be better informed, but you can advocate for certain causes with attainable approaches.
  • If you have a junior level position in the financial services industry, continue to have your purpose drive your work. Again, when we lose sight of the impact of our work or why each of our job functions matter, we become complacent and begin to view our actions as solely transactional. Instead, keep your work people-oriented, and remind yourself of your mission every day.
  • If you are a finance leader, realize the importance and impact your work has on others. You have the potential to contribute to shaping the course of history, either for better or for worse. Never underestimate how your actions and decisions influence others, ranging from those working alongside you to the millions of stakeholders you are responsible for. 

 

By taking these actions, we will become one step closer to having finance work for everyone–and while the entire global population may not understand finance’s purpose to this degree overnight, we will make incremental success toward this end goal. After all, when it comes to societal awareness in the lens of finance, we are not in a sprint but instead a marathon.

An Antidote to Polarizing Controversy: Civility, Conversation and Compromise

By Compassion, Courage, Curiosity, Humility, Impact, Integrity, Principles, Resources No Comments

You may be sick of hearing about polarization, or perhaps experiencing it, but this (understandable) exhaustion eventually gives way to apathy which ultimately resigns our society to a deep, harmful division. So, I encourage you to read on, because hope is only lost when we give up on the challenges we face and become complacent. I truly believe that a major shift in bridging divides is possible, but only if each individual works at it, practicing new habits in their everyday interactions. In order to form these new habits, we must first remember and reflect on shared values. The six Scholars of Finance values provide a strong foundation and starting point for a much needed transformation in how we treat one another. In this blog post, I explore the different ways in which our principles guide us through the tough and often uncomfortable conversations with which we are consistently confronted, from a casual classroom debate to a workplace discussion about current events. I also take what I have learned from others who have had to toe the difficult line of controversy and compromise in politics, one of the most heated arenas for these conversations. 

 

Finally, I want you to know that I am no stranger to holding opposing viewpoints in tension. As someone who grew up in a conservative, Christian home and attended a liberal, secular school, I spent each day going back and forth between opinions, forming my own from what I heard my parents, teachers, and peers say. I write this not to force my own personal beliefs on anyone, but rather to help you navigate everyday situations such as my own with grace, humility, respect, and, hopefully, success.    

 

When it comes down to it, we are all human beings living on one, shared planet. When we look at the bigger picture, we can all realize that it is much more important to have respect for one another, to care for one another, and to work together for the greater good than to bombard our co-worker or family member with a barrage of statistics to explain our point of view and shut theirs down. However, holding respect for others’ viewpoints is often easier said than done. In fact, in the everyday interactions we have, we all fall into the trap of needing to be correct, of needing to convince others of our point of view, and of needing to get the last word in. Sadly, when these temporary desires take over, our values start to fade into the background, and we become creatures of the moment, easily swayed by the temptation to “win” the debate. However, this is something that when we assess rationally and outside of the heat of the moment we find to be unsustainable. If we live all of our lives trying to simply prove our point to others with the sole purpose of “winning” without listening to others’ perspectives, we will get nowhere. No one is right 100% of the time, so why go through life with that false perception, when we can instead learn and grow by listening to others? For a more concrete example of how this plays out and is a benefit to businesses, you can observe the 20% increase in innovation brought upon by diversity of thought, as discussed in a Deloitte article. In a workplace, we need to be able to harness those diverse perspectives effectively, and thus, respectfully

 

Each SoF Value has principles which speak to this issue quite well, and offer simple yet profound advice for how to live a life of civility, conversation, and compromise.

 

  • Integrity 
  •  Speak the truth at all times.  

This is the only way to get anywhere with difficult conversations. Both parties need to speak the truth, whether that be honestly sharing a personal experience, or backing up opinions with factual data.  

 

  • Compassion 
  • Foster relationships with respect and empathy. 

Maintaining respect throughout difficult conversations is absolutely critical. Without a foundational level of respect and empathy, conversations about hot button issues can quickly escalate to heated debates or even full-scale arguments.  

 

  • Humility 
  •  Ask for and share honest feedback regularly.  

Conversations within personal relationships or in the workplace will often necessitate a discussion about where things need to be improved, and are a perfect setting for practicing civility within difficult conversations. But we first need to be open to that feedback before beginning the conversation.  

 

    • Curiosity 
      •  Seek first to understand, then to be understood. 
  •  Pursue and embrace diverse perspectives.  

We live in an incredibly diverse world, and we should take advantage of how much we can learn from each other. We all grow when we step out of our comfort zones, hear a new perspective, listen carefully and begin to question our previously held views. Perhaps this leads to a change of mind, or simply solidifies our views if we have found that we disagree with the fundamentals of the opposite argument. No matter the outcome, the key is to listen to someone else’s reasoning behind their view before making a hasty judgement or interjecting with our own opinion.

 

  •  Impact 
  • Operate patiently and think long term.  

Ultimately, when we need to have a serious conversation with someone important to us (professionally, personally, etc.), there is no guarantee that everything will be worked out in a single chat. These discussions could take months or even years, and we need to be patient with ourselves and with one another. 

 

  • Courage 
  • Stand up for what you believe is right. 

While the best practice is to listen to others seriously and consider what they have to say, at no point in this process should you compromise your own beliefs and values. Compromise on common ground, but, if after carefully considering all perspectives with an open mind, you still hold the same views, don’t compromise on what you truly believe is right. 

 

In addition to our SoF values offering guidance, we can also learn from leaders within politics about how they handled polarization. I attended a Zoom lecture/Q&A with Condoleeza Rice, former Secretary of State and National Security Advisor, who gave incredible insight into this exact topic. She explained how critical it is to be a good listener in order to see where there is common interest and overlap, which should be the most important part of a controversial conversation. 

Chris Campbell, the former Assistant Secretary of the Treasury for Financial Institutions and majority staff director for the U.S. Senate Committee on Finance (which he held among other high ranking government roles), spoke to SoF students and shared his own experience balancing agendas and perspectives which were definitely at odds. He emphasized always being honest– no matter who it is you are speaking with, and to fight the instinct of thinking poorly of someone for simply having a different perspective

Lanhee Chen, a political campaign veteran, who served as the policy director for the Romney-Ryan campaign, maintains a similar perspective, and believes in beginning the process of these discussions by agreeing on a problem statement. For example, if both a Democrat and a Republican can agree that healthcare costs are too high in our country, that is a place of common ground from where they can begin, and then they can work together to find a solution. 

While it has been far easier to write this out than to put it into regular practice, I genuinely believe that if we listen carefully, assume best intentions and think well of the person across the table from us, and start from a place of common ground, we can actually begin to make progress. Remember, this doesn’t just apply to politicians; it applies to you while conversing with your dad who holds the exact opposite political views as you, to your colleague when you need to revamp your company’s sales strategy, and to your friend at dinner when she brings up the local elections. 

In summary, remember that you and everyone around you are merely humans. You are humans who make mistakes, who have had countless views thrown at you by the media, school, and family for as long as you can remember, and who are just trying to do the best for yourself and those around you. We are all going to mess up on this journey, but let’s mess up together, be understanding, and find common ground through civil discourse and legitimate compromise—and, most importantly, let’s do it all with genuine respect for one another. 

 

Further Reading + Resources: 

If you have questions, comments, or concerns, feel free to reach out to the author at: isabella@scholarsoffinance.org or bella17@stanford.edu.

Ethics and ESG Investing

By Green Investing, Integrity, Principles No Comments

The first time I learned about ESG investing was during a social impact course my freshman year of college, one required by our university for all of us future business leaders to learn about the way corporations influence the communities around them. It was a concept that brought together environmental, social, and governance factors under one investment thesis. I remember thinking: “This is the future of finance that I want to be a part of.”

 

Accelerated by the many socially impactful events that have occurred since the start of 2020, it seems that the trend towards ESG has only been moving forward. Demand from both consumers and investors for more transparent and responsible business practices is louder than ever, and financial institutions are offering an expanding line of ESG products that just a decade ago hardly even existed. It’s a promising turn towards a more sustainable future for business and capital markets. However, with that seems to be coming a slow dilution of the true values that underlie ESG. 

 

ESG stands for environmental, social, and governance. It encompasses the way that businesses interact with society, measuring their impact and the ways that they give or take away from the good of the whole. In practice, ESG can be a tool for investors to screen for companies that don’t align with their values. Is this business negatively influencing changes in our climate? Does this one have unethical labor practices? Do they take advantage of any marginalized communities, or are underrepresented backgrounds not welcome at this firm? These are some questions that may come up when deciding how “ESG friendly” a company really is. Part of the reason that ESG has been growing in popularity as an investment thesis is that it isn’t just a feel good tactic. Studies have shown that ESG factors have a direct impact on a company’s long term sustainability and profitability. For example, an article written by Credit Suisse’s Global Head of ESG Strategy references a study done on the impact of the COVID-19 crisis on ESG and non ESG indices in European markets. Those that were ESG focused fared better than those that were not. If a company doesn’t take into account the implications of real world events on their business operations it adds a layer of risk for an investor. 

 

The problem is, there is no standardized way of measuring a company’s level of ESG integration. Every financial institution does their analysis differently, and so the criteria of the research can vary. Not only this, but currently the information that firms themselves report isn’t standardized in the United States. ESG disclosures are optional, making it hard for investors to perform their due diligence, and hard for people to really understand what they’re buying into. It also makes it easy for companies to greenwash – as in, build up an image of being socially conscious or environmentally sustainable through clever marketing and branding, when in reality, their operations say otherwise. ESG seems to have become a buzzword, along with “sustainable”, “green”, and the like.  Ultimately, there needs to be a way to strip away the fluff down to common measurements and metrics of a company’s ESG integration. Although it’s a challenge to figure out how to translate something as complex as the societal impact of a firm into comparable data, it’s necessary to help consumers and investors like myself navigate their way through the weeds and decipher who is really taking action to back up their words. 

 

On one hand, it pains me to see some businesses use ESG as a profitable tactic. Although there are many profitable companies driven by values of corporate responsibility, there are some that use ESG in a way that seems artificial, motivated by money rather than morals. On the other hand, I ask myself, does it matter why a company is doing it as long as they are? The argument can be made that even greenwashing brings awareness to the importance of a business’s impact on the environment, and ESG factors, even if only lightly taken into consideration, are better to be seen as a business tactic than not seen at all. 

 

I chose to pursue a career in finance because I see that money has the power to create change. In my short time as a student in the industry, I’ve met people, some with a lifetime of experience and some who have only just begun their careers, who give me a lot of hope for the future. They motivate me to hold on to my values in such a competitive space, whether it be understanding the impact of my actions or doing my best to work with integrity. My time at Scholars of Finance has also influenced the way I approach my career. I’ve become more sensitive to the motivations behind my decisions and the way I interact with others; this month’s value of humility has really reminded me of how much more I have to grow. However, I’m worried that there may be a balance that needs to be made between staying true to what I believe in and working alongside the motives of others in order to make progress towards a future I hope to see. 

 

As much as I’d like it to be so,  I don’t believe ESG measures will be implemented in every company simply because it’s good for society. Often, they will be implemented because they help a business appeal to consumers, or standardized requirements have been passed, or future costs of climate change, government policy, or dissatisfied workers make it too expensive not to in the long run. 

 

I can’t say if I think the implementation of ESG measures are a good or bad thing. All I can say is what I do believe: In the end, this earth, along with the people in it, are what support a business. With the ESG movement comes more visibility for this relationship, more pressure for companies to put their money where their mouth is, and more movement towards standardized regulation and reporting in the ESG space. We’re entering an age where companies can’t ignore their dependence on all of their stakeholders, and today, these stakeholders have more power than ever to hold companies accountable. It may be a necessary evil to accept that some won’t be motivated by the common good. Some may not even care to make changes past the surface level. But ultimately, that’s okay, because eventually, those will be the ones left behind.

Modern Integrity and Impact

By Impact, Integrity, Principles No Comments

“Something came up.” This is perhaps the most common requiem sung on behalf of failed commitments and unfulfilled responsibilities. And, perhaps relatedly, it is often one of the least heart-felt. Sure, it’s unfortunate that we had to abnegate our duties — but we had no choice. Unforeseen circumstances required us to take extraordinary measures in order to be present in some other space. While the failure is unfortunate, it does not reflect on our integrity or moral character. We did the best we could.

 

Perhaps. I want to argue that the sense of integrity which is not injured by such a decision is running on an antiquated operating system, and desperately needs to be upgraded to reflect our modern world. Such an upgrade to a fully modern interpretation of integrity will not only allow us to better keep our commitments, but will also feed into our ability to impact the world around us more generally. This modern integrity will ask much of us—I’ll leave it to you to decide whether it’s worth the while.

 

So what is “something came up” integrity? Well, to use the framework of human development pioneered by Harvard psychologist Robert Kegan, often it is a sort of integrity which presupposes a stage-3 communal self. This version of the self identifies as a set of relationships, all of which impose potentially unlimited obligations on us at all times. According to the communal mindset, integrity comprises in meeting whichever one of these infinite obligations presents itself in the moment. If multiple obligations happen to present simultaneously, we break the tie between infinities by following our emotions; i.e. we planned to give a talk, but then our friend’s goldfish died, and, well—something came up. Because we’re always under these infinite obligations, any commitment we make comes with a laundry list of asterisks attached—it becomes provisional.

 

This might sound reasonable—after all, even the most cold-hearted would probably agree that there are some unpredictable events in life that do indeed impose obligations that overwhelm the ones we formed in previous commitments. We probably should not walk over someone dying on the street in order to make it to our meeting on time. But, it can be overused, with dire consequences. How many marriages failed because “work came up” on one too many date nights? How many companies failed because personal matters came up for one too many mission-critical workers at the wrong place and in the wrong time? How many careers sputtered because “something came up” and impeded one too many crucial actions? Many of the best things in life depend on commitment, and I challenge you to think of one which hasn’t been jeopardized for someone you know by something that “came up” which wasn’t truly enough of an emergency to warrant it. Once you look for it, you’ll hear its somber tune all around you. We sing it every day.

 

Fortunately, there is an alternative. According to Kegan, the next stage in human development is the stage-4 institutional self. Here, obligations depend on context, which for all but a few is non-global. We might be a parent, child, boss, subordinate, friend, partner — but we are not subject to unlimited obligations coterminous with each role at all times. We can leave our work phones on silent while bonding with loved ones and tell our bereft goldfish-keeping friends that we will console them after our mission-critical work meeting. It might seem cold to draw boundaries like this, and perhaps even uncaring. But is the best way to communicate care to someone really the extent to which we’re willing to neglect duties that third parties are relying upon? As long as we keep boundaries firm all-around, no one should get shortchanged, and everyone will be able to count on us. Our voice will be one fewer added to the morbid chorus of something-came-up dirges.

 

Life will become more predictable, which is a prize of its own. The communal model of self is perfect for a small hyper-egalitarian community whose time constraints on work do not bind — exactly the kind that dominated before the invention of projectile weapons and agriculture. But in a world characterized by complexity where time constraints bind tightly, it’s simply not a viable way to make an impact. If we follow Professor of Neuroscience Karl Friston’s model of intelligent agent action and consider cognition to be guided by a process which seeks to minimize surprisal (free energy), we can get a clearer picture of why this might be.

 

Under a Fristonian model, there are two main sources of surprisal: goal-related and means-related. We can think of goals as expectations; we expect to eat every day, and if we didn’t, we would, at some level, be surprised. To ensure we don’t encounter this surprise, we take actions; we might go to a restaurant with some friends. Of course, this introduces potential surprisal as well — what if the restaurant turns out to have a pest problem, or a fight breaks out at a nearby table? As long as the expected surprisal penalty you incur by the means is less than the surprisal you’d suffer from not eating, you’ll take the trade. If it’s not, you’ll probably find yourself skipping lunch — and perhaps minimizing surprisal some other way, maybe by scrolling through social media.

 

What does this all have to do with impact and integrity? To the extent that actions are downstream of obligations, a sense of self guided by obligations which are clear, pre-determined, and context-dependent will pre-potentiate predictable actions. When we are able to fully commit to future actions, the amount of variance — expected surprisal — that those actions will “cost” is drastically reduced. Eventually, it might become so low that we take the actions almost unthinkingly; habits are the epitome of non-provisional commitment. While most of us can’t live a life constituted 100% of unthinking habits, we can extend the fundamental principle they depend on: that the derivative of success with respect to expected action surprisal cost is negative. 

 

This is a principle we all intuitively know: when we want to finish a big project, we might write down all the necessary tasks into a list, or maybe even vividly imagine ourselves completing them. We set clear expectations and align on goals and strategy. Computationally, it’s (not-so-simple) arithmetic. Predictability means less action cost means more goals met over the long run. If we wish to make an impact, the answer is clear: ditch stage-3, and embrace stage-4. If our goal is to change the world for the better, we can’t accept a life whose soundtrack is that oh-so-familiar song on repeat, whose commitments are provisional and wherein we pay out the nose in terms of expected surprisal for the actions we need to take to achieve our goals.

When we have a second to reflect, let’s ask ourselves: Do I show that I care for others by carving out and defending quality time with them, or by reneging on my commitments to third parties when something comes up for them? Do I let myself off the hook a little too easily when I don’t follow through? Do I minimize the expected surprisal cost of the actions I need to take to get things done, or do I vainly blaze a new trail through the jungle of chaos and unpredictability every day? Do I ever fail to reach my potential because I’m unsure, uncertain, or uncommitted? These are tough questions, but all we have to lose is our expected action surprisal cost — and an old earworm.

Integrity: You Only Have It When You Know You Don’t

By Integrity, Principles No Comments

At Scholars of Finance, we have six core values that are at the center of what we teach: Integrity, Compassion, Humility, Curiosity, Impact, and Courage. Each month, our members vote on the “Value of the Month”, which helps focus our discussions on topics pertinent to that value.

Integrity was our value for March. Here are our epithet and principles for Integrity:

Integrity

Do what’s right

  • Do the right thing, always
  • Build trust through transparency and accountability 
  • Honor your responsibilities and commitments
  • Speak the truth at all times

We utilize integrity in both a moral sense and as a barometer of trust. It both calls us to do what is “right” while also calling us to be trustworthy. These are mutually reinforcing. There are millions of pages written about what is “right”, which have culminated in an abundance of religions and moral philosophies informing how we collectively act. However, I will unpack the question of how to “define what is right” in a later blog post. For now, I will offer one example that I think is not overly controversial, builds trust, and happens to be one of our principles – to speak the truth at all times.

Many people I’ve spoken with over the years have shared that integrity, or honesty, is a core value of theirs. We rarely meet someone who claims they need to become more honest. And while I hope that this is simply a result of surrounding myself with honest people, I often wonder if this actually reflects a lack of self-awareness? Or something even worse, that our collective standard for honesty or truth is diminishing? According to the Pew Research Center, I’m not alone in wondering, as a majority of people (51%) think that misinformation online is a problem that won’t be fixed.

However, speaking the truth at all times, for many of us, seems like a “given”. It is presumed that we will do this and that we already do this. If we were a liar, how could we live with ourselves? Yet, taking time to reflect on this principle and just how profound and radical it is, opens our eyes to just how much room we have to grow in honesty. Dinner with a friend, his niece, and a couple of her classmates recently got me thinking about this. Since “Speak the truth at all times” was the principle we spent the following week reflecting on there was a timely opportunity to dig into it with our organization as well.

The young woman was a senior in high school. I was visiting my friend when she and her friends also happened to be visiting him as well (he’s a cool uncle worth visiting). They explained to me that their classmates cheat on tests rampantly. Everyone turns off their cameras on Zoom, gets on a group FaceTime, and they take the exam together. It’s become commonplace. I was a bit shocked.

As I felt myself begin to judge, the maxim “judge not lest ye be judged” came to mind. I realized that I am not one to judge because I am not perfectly honest. As I started to think about my own shortcomings, a couple of Zoom-related “white lies” that I have told struck me. I started talking to our students and some of my friends about these and many of them reported doing the same things. 

For one example, have you ever been distracted on a Zoom call, whether with work or email, been asked a question, and said something to the effect of, “Sorry, my (audio, wifi) cut out (or insert other technical difficulties), can you say that again?” I’ve done this more than once. When I ask this question on Zoom calls, almost everyone smiles knowingly or nods. 

When I shared this with one of my teammates last week, they shared an example of a small concession of the truth in their own lives too. Notably, one person shared that they will sometimes do 10 push-ups in the morning just to be able to tell people they worked out that morning – to seem productive and disciplined. But they acknowledged that the statement “I worked out this morning”, while true, generally implies they spent at least 20-30 minutes exercising, which was not the case.

Personally, I was hardly even aware that I was making small concessions of the truth. It reminded me that we stray from the truth in small ways, oftentimes almost imperceptibly. This can lead to much larger concessions of the truth over time. Simon Sinek talks about this snowball effect in his recent book The Infinite Game, which my mentor Anthony Paquette sent me – the phenomenon is called ethical fading. Ethical fading is a well-studied process by which we “slowly and gradually make moral or ethical concessions sometimes unconsciously which compound into increasingly significant ethical failures.”

This concept implicates us in a high-stakes relationship with honesty. We need to be thoughtful and diligent about cultivating integrity. Especially if we are going to be finance leaders and investors – making decisions with millions of dollars – where the upside to being dishonest has lured many down the wrong path (and into jail). Every one of us can benefit from taking the time to introspect on our integrity. If you’re reading this and thinking, “you’re wrong, I’m completely honest and none of this applies to me”, just set aside 30 minutes and ask yourself these questions:

  • Have there been any times in the last month where I have not been 100% honest, even in small ways?
  • Is there something I’ve been holding back from saying to someone that needs to be said?
  • Have I been 100% honest about how I feel about things with the people close to me?
  • Does my language sometimes imply more about what I’ve done than I actually have?
  • Has someone said something to me recently that made me defensive? Could there be some truth in their statement that I am overreacting to?

None of us are perfect, and that’s ok. What’s important is that we are willing to own up to the times when our integrity lapses. It’s how we approach these moments of ethical fading that can either lead to a slippery slope of low integrity decisions or a career built upon trust that is rightfully earned. 

I believe that all of us doing this in our own lives can inspire many more to do the same. Just like talking about mental illness can break the stigma and fuel recoveries, talking about ways our honesty has slipped can break the stigma of failure and fuel deeper relationships, whether with loved ones or teammates. Counterintuitively, it builds trust with others as people recognize your self-awareness and conscious effort to hold yourself to a high standard of integrity. 

With that, I hope you haven’t judged me as you’ve read my confession about my own shortcomings (being honest about this stuff does feel vulnerable!) and I also hope that you’re feeling even just a little motivated to examine areas in your own life where you can grow in integrity. And, if you’re really inspired, I hope you’ll talk about it with others to get accountability and grow with them too.

Enduring the COVID-19 Quarantine

By Courage, Curiosity, Humility, Impact, Integrity No Comments

Lately, I’ve been thinking a lot about the world as a singular, integrated entity—one free of borders, restrictions, or individual nations. Rather, a massive unit of free-flowing thought, boundless inspiration, and limitless ideas. With our current circumstances, how could I not? No matter which corner of the Earth you hail from, you are likely to be one of billions stuck at home, battling similar feelings of concern, angst, or frustration toward the COVID-19 quarantine. However, looking past its overtly devastating impact and a tragic impediment to society, COVID-19 has left one particularly remarkable effect on the world—solidarity

A new degree of global awareness, one that is far too often lost in the hectic pace of everyday life, has been garnered by so many of us. For example, never have I found myself so engaged in the daily lives and feelings of those from Italy or China, who were initially afflicted the most dramatically. Never have I been so inspired by the collective voices of citizens singing from balconies, or videos of healthcare workers stripping their masks off in celebration of success. Never have I felt so in sync with the world or understood so clearly the nature of humanity—to suffer, and heal, as one.

Still, even with a firm grasp of the nature and severity of the situation, how are we going to get through this? As Scholars of Finance members, business students, and analytical enthusiasts, we are certainly accustomed to a level of unpredictability, but never before on this scale. How can we make the most of our time during the COVID-19 quarantine? In what ways can we harness growth and continue to build our personal and professional skillsets? While I am no expert, I am happy to share the number of ways I have been sustaining my productivity and sanity, plus a few more that might help you do the same.

First and foremost, while I have continued maintaining relationships that I have formed with professionals during my first semester at NYU Stern, I have also continued maintaining personal relationships. It is equally as important to check in on those who care about you and to be responsive. Allow your academic and professional roles to be principal in your life, but prioritize your friends and family just as carefully. From personal experience, when you have trouble balancing all of these different sectors of life, consider revisiting the Scholars of Finance core values—integrity, humility, curiosity, courage, and impact—to help guide your decisions.

Furthermore, it is very possible to excel in your academics. Following a relatively strict time schedule to complete your coursework, possibly one identical to your pre-quarantine schedule, deems itself a promising plan. Give yourself a structure. Consistency is key. Still, it wouldn’t hurt to change out of those pajamas you’ve worn for three days!

On a more professional note, it is unfortunate to hear that many summer internships have been canceled. However, there are a number of firms that are willing to accommodate internships digitally. In fact, just last week I interviewed for a firm that told me to expect the possibility of an online transition. Additionally, there is a multitude of online resources aimed at providing alternatives to those whose internships have been canceled: I’d recommend simply opening up your LinkedIn account, and I can guarantee that a number of these resources will pop up on your feed. If you’re having trouble, be sure to reach out to your established connections or create a post—you never know who might be able to help you. Luckily, interview prep, resume workshops, and career panels are still in abundance. Many companies are hosting live and interactive webinars, such as Wells Fargo’s 2020 Beyond College Webinar Series, and are committed to your success now more than ever.

With that, I hope a weight is lifted off your shoulders and you are able to find clarity in the transition to a digital academic/professional experience if it comes down to it. Again, it can be extremely beneficial to stay busy. Keep up with your coursework, continue advancing your professional skills, and maybe even pick up a new hobby—personally, I’m trying to learn Spanish!

To the extent that you can, try to mirror or slightly modify activities that helped you find success, and peace, before the days of the COVID-19 quarantine. In the midst of enormous chaos, it is vital that you keep stillness inside of you. Here at Scholars of Finance, there is a tremendous amount of support and guidance through all of this, so do not hesitate to reach out to a member or an executive should you feel lost or defeated—maybe even consider joining our organization in the future. Lean on your family, friends, and mentors as you see fit. It is difficult to overstate the tragedy and disturbance that COVID-19 has brought us, so please know that any fears or concerns you may have are valid, understood, and empathized with. Above all, stay positive and hopeful for the future—your own future, the future of the sick or less fortunate, the future of the economy, and the future of the cities you might call home. As not just a member of Scholars of Finance but a student at NYU Stern, I am incredibly hopeful and optimistic for the greatest city in the world (and others) to beat COVID-19 and to return just a little bit greater.

 

— 

Tony Ferrara is a member of Scholars of Finance and one of the original Co-Founders at New York University. Tony is currently a freshmen at New York University and is majoring in finance and sustainable business with a minor in public policy at the Stern School of Business.

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