According to the 2013 Reader’s Digest Trusted Brands survey, while politicians remain the least trusted profession, trust in financial advisers has continued to plummet. Indeed, 74% of Europeans say they have little or no trust in financial advisers – putting us marginally ahead of second-hand car salesmen and, strangely enough, footballers!
To be sure, it would be extremely naive to think that after such a deep financial crisis as we have come through these past few years, regaining trust would be an easy nut to crack.
But perhaps we need to look a little harder as to why it’s proving so difficult and slow for the tide to turn.
While increased regulation has seen the sector washing its dirty laundry in public – to highlight the strong action needed to restore confidence in the system – have we possibly underestimated our own side of the bargain? Has relying on tighter regulations to fix the problem made us attach too simplistic a tag on trust?
The fact is, when it comes to financial services, trust is anything but simple.
Unlike a single product or service that you may either love or hate, financial planning specifically involves a huge range of insurance, investment and banking products – none of which is flavour of the month at present.
And while the financial advice sector is not without its own problems, any failings of these individual products have also had a negative impact on sentiment.
But perhaps our biggest mistake has been our willingness to assume that trust can be ticked off in order of preference, above or below attributes such as the provision of high quality products, or good performance.
The top attributes that build trust now relate to integrity – not performance, or indeed fee structure, according to the 2013 Edelman Trust Barometer.
This doesn’t mean that we should turn our attention away from ensuring the growth and protection of a client’s wealth or due diligence on the products we may recommend. Quite the opposite. But it has now become more important for clients to see that we offer our services in a more transparent and open way, and that we take responsible actions to address an issue or a crisis.
So while it’s clear that investors expect governments to improve oversight and enforcement within financial services, in order to restore confidence and improve levels of trust, it’s equally clear that from a business perspective, we need to up our game.
This means rethinking the very essence of what trust means to clients, as well addressing the practical aspects of improving staff training, operating ethically, and being crystal clear as to what one’s clients can expect.
As we go forward, it is these more engaging, external-facing behaviors and policies that will differentiate trusted advisers from the rest.
Now how complicated is that?
David Howell is chief executive of Guardian Wealth Management
