Financial services continues to be the least trusted industry globally, according to the 2014 Edelman Trust Barometer. The least trusted group in the financial services sector are financial advisors and asset managers.
The problem, according to Federal Reserve Bank of New York President William Dudley, is “the culture of the [Wall Street] firms.” According to a recent ThinkAdvisor.com report, he warned that if the industry doesn’t begin reforming itself, regulators will step in (See “NY Fed’s Dudley, CFAs: Industry Has a Big Trust Problem. Are Advisors the Solution?” Jan. 20).
Lack of an ethical culture is the main reason for public lack of trust, agreed nearly two-thirds (63%) of portfolio managers, analysts, advisors, market consultants and C-level executives polled in the CFA Institute’s latest Global Market Sentiment Survey. Tellingly, only 28% of these professionals had a positive opinion themselves of market integrity.
The two remedies most likely to build trust, according to the survey respondents, are to better align compensation with investors’ objectives and establish a corporate policy of zero tolerance for ethical breaches.