Now a Message from the “We Hate Wall Street” Coalition

A series of radio ads highly critical of Wall Street pay began airing this week in New York City. The radio spots —  which lament that bankers, brokers, and money managers are now earning more than ever before, just two years after a taxpayer-financed industry “do over” — are courtesy of an organization known as the Coalition for a Strong Economy for All, a group of public and private-sector unions and community groups.

While we are accustomed to negative campaign ads in the heat of the political season, or even when labor contracts are up for negotiation, this is notable, even by Wall Street standards. The ad campaign offers a poignant reminder that the public, like never before, is fed up with what they perceive as a system skewed in favor of Wall Street executives, even as a widespread recession, rife with staggering unemployment and a record number of personal bankruptcies, continues to exacerbate the plight of many Americans.  

As a professional association whose members dot the entire landscape of the global financial services industry, we cannot afford to ignore the mounting public outrage over compensation. We know that, on the one hand, our industry provides one of the most important services an industry can offer to a maturing population — financial security. At the same time, the industry is compensated dearly for the privilege of providing that service.

While the “Main Street vs. Wall Street” hyperbole has been a mainstay of pundits since the height of the global financial crisis, we cannot ignore that, in relatively all corners of society, there is growing consternation over industry pay practices. It leaves us wondering what is the ultimate fate of a profession whose main reason for being — the delivery of professional, credible service — has fallen woefully short of expectations while its compensation level has seemingly remained unaffected. 

Perhaps our profession will successfully divert attention away from this issue by blaming the ills of Wall Street on a once-in-a century market bubble while assuring investors of its professionalism and credibility. Meanwhile, recent legislative and regulatory rumblings suggest the industry will be forced to moderate or otherwise cut back.

There is another option. Financial services firms could step up and make transparent and meaningful changes to their longstanding pay practices. Perhaps the public and regulators will never be satisfied, but in this environment, I know which one I would choose — and investment practitioners should be prepared to demonstrate to their clients and prospects that their compensation reflects fair rewards for services of value. Let us know your thoughts.