Views on improving the integrity of global capital markets
05 February 2016

Edelman Trust Barometer 2016: A Mixed Bag for Financial Services Sector

The 2016 Edelman Trust Barometer offers some good news and some bad when it comes to public trust in the financial services sector. Let’s start with the bad news: Financial services ranked last in the 25-country survey of the general population with a 51% trust rating. The good news is that public trust in financial services has increased 8% since the 2012 survey.

How does that compare with other business sectors?

For the 16th consecutive year, technology (74%) remains the most trusted industry. The automotive industry saw the sharpest decline in public trust, falling to 60% from its 2015 level of 66%. This is likely influenced by the emissions scandal uncovered at Volkswagen, and safety-related recalls of other manufacturers.

Edelman Trust Barometer 2016 Results

A potential driver of lower trust levels for certain companies: The public’s perception they’re not delivering on attributes of high importance to stakeholders (integrity, engagement, products, purpose, and operations). Integrity and engagement continue to have significant gaps between what is considered important and how companies are performing on these attributes.

Importance vs Performance

Having ethical business practices and being open and transparent have gaps of 20 and 24 percentage points, respectively, between what’s important to stakeholders and companies’ perceived delivery on attributes. These are key elements in building trust with investment clients.

Placing clients first and communicating honestly have gaps of 24 and 19 percentage points, respectively. These elements are key to showing investment clients you are holding their interest as paramount to any other.

Investment management firms looking to narrow the trust gap should consider taking these important steps:

As the 2016 Edelman Trust Barometer highlights, the public is looking to businesses to engage in efforts to improve society at large. According to the report, “Whereas 59 percent believe that it is the role of government to regulate, 80 percent say that it’s the responsibility of business to lead to solve problems. Specifically, eight in 10 individuals believe that a company can take specific actions that both increase profits and improve the economic and social conditions in the community where it operates.”

The financial services sector still has room for improvement in its bid to further rebuild public trust.

Watch this space for a joint survey from CFA Institute and Edelman on how investment managers can build lasting client relationships.

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About the Author(s)
Glenn Doggett, CFA

Glenn Doggett, CFA, was a director of professional standards for CFA Institute. His responsibilities included providing member guidance in applying the ethics and standards of practice policies, supporting related educational and public awareness activities, and working with the Standards of Practice Council of CFA Institute on its initiatives. He was a co-host of the free, live, interactive webinars used by CFA Institute to promote ethical decision making and global best practices. Previously, Mr. Doggett, as a member of the CFA Institute Financial Reporting Policy Group, represented membership interests regarding reporting and disclosures initiatives, including XBRL. Prior to joining CFA Institute, he worked in the financial information sector with SNL Financial, where he focused on the real estate and energy industries, directing the development and maintenance of a financial data storage system. Mr. Doggett holds a BA in economics from the University of Virginia. He was awarded the CFA charter in 2006 and is a member of CFA Society Virginia.

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