Who thinks Wall Street has a reputation problem and that increased regulation is needed to restore trust in the financial services industry? Wall Street, that’s who.
Many surveys have established that Wall Street and Washington have been in ill repute in recent years, but the 2012 Makovsky Wall Street Reputation Study is unique in surveying not the masses but the executive suites.
“There are tons of surveys of the public,” says Scott Tangney (left), who works in Makovsky’s financial services industry practice. “We wanted to poll the people on the front lines—the people in charge of keeping the companies’ reputations.”
To that end, the New York-based consulting firm hired the research firm Echo to survey 150 marketing and communications executives at publicly traded and privately owned banks, investment companies, brokerage firms, mutual fund and ETF companies and the like.
The survey population consisted of senior-level executives—chief marketing officers, vice presidents, directors and managers at large and midsize firms. Within that survey population, the margin of error is plus or minus eight percentage points at a 95% confidence level, Tangney says.
Perhaps surprisingly, nearly all of them—96%—say financial services companies invited the public’s negative perceptions through their actions or inaction.
Tangney, who presented his survey’s findings to financial communications executives Tuesday at the New York Yacht Club, said—in a separate interview with AdvisorOne—that nearly two-thirds of those surveyed said their companies’ own management of the crisis had the biggest negative impact on Wall Street’s reputation over the past 12 months.
Indeed, a majority of respondents—57%—grade Wall Street’s public relations effort with a C, D or F.
“We’ve had a crisis of reputation that’s really a crisis of confidence that’s spilled over to retail investors,” Tangney says. “Markets are really volatile and investors are on the sidelines. They’re not comfortable with the market. The flash crash, MF Global blowing up—these are issues that are keeping the wound open.”
A key issue that Wall Street’s reputation managers fear is keeping wounds open is executive compensation—81% of respondents see it as a problem.
“Battles over executive pay will probably be [an issue] this proxy season,” Tangney says.