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.
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.
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:
- Adopt the CFA Institute Asset Manager Code of Professional Conduct and Global Investment Performance Standards (GIPS®) to demonstrate a commitment to working for the clients’ interest.
- Endorse the Statement of Investor Rights to advance the investment management profession. This is one example of how CFA Institute is working to shape a trustworthy, forward-thinking financial industry that better serves society through our Future of Finance initiative.
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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