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December 31, 2013 at 12:41 AM
As the year comes to a close, the issue of trust has exploded onto the national screen. The meaning and impact of ObamaCare—and how it was promoted by the president—has, for many, become an issue of trust. Advisors should take note. Our own issue of trust calls for attention and action.
The research suggests investor distrust spawned by the financial crisis persists, is widespread and is, in all probability, already influencing the markets. This is not (publicly) questioned. What seems to be in question is what, if anything, advisors need to, can or should do about it. There’s far been too little industry discussion or action addressing the implications of the public viewing advisors’ honesty and ethical standards (however unfairly) as they do Wall Street bankers’.
A paper from the conservative think tank, the American Enterprise Institute, concludes that when it comes to Americans’ views of Wall Street banks, “The consensus is that many of these firms are not ethical or concerned about the well-being of the country.” Industry consultant Chip Roame puts a sharper edge on the point of what the public believes: “The whole industry is evil…you are lumped in with Madoff.”
For many experts, there’s no mystery about what brought on these sentiments, and what the profession needs to do to win back investor confidence. What’s also clear are the factors that did not significantly contribute to investor distrust, such as investment performance, products or technology snafus.
Robert Fronk, the author of the Harris Reputation Quotient Survey, which annually measures the reputations of the most visible corporations, makes clear what is important to investor confidence, “One thing the public is screaming loud and clear about financial services: Be more sincere. Be more honest. Be more transparent.”
There has been some industry discussion. A few 2013 examples include: Wealthmanagement.com editor David Armstrong, who recently recited some industry developments that he suggested contributed to investor distrust and then observed, “Yet too often it seems as if the industry isn’t really concerned with building client trust at all.”
