2017 Edelman Trust Barometer Shows Overall Decline, But Financial Services Improves
The most recent Edelman Trust Barometer, released in January 2017, reported broad decline in trust by the general public across the four institutions it looks at: government, business, media, and non-government organizations (NGOs). Trust in media fell to an all-time low in 17 countries and trust in government dropped to 41% from 42%. Today, government is the least trusted institution in half of the 28 countries surveyed.
Although trust was down in the four broad institutions, the ranking by the general public actually increased in individual business industries, as shown in the following charts. Survey respondents are asked to indicate how much they trust businesses in the listed industries to do what is right. Technology remains the most trusted industry, with 75% of respondents indicating they do trust the industry. And although Financial Services remains at the bottom of the trust ranking, the trend over the past six years is positive. Financial Services has increased its trust score by 11 pps (percentage points) since 2012. This increase is double the rate of increase for the other industries except for Energy, which increased by nine percentage points in the same time frame.
It’s the Economy, Or Is It?
The positive results of many market indices may be bolstering the trust values. According to CNN Money, the best stock market performance for 2016 came from markets in regions around the world.
|2016 Percentage Gains
|RTS Index (Russia)
|Merval Index (Argentina)
|Bovespa Index (Brazil)
|All-Share Index (Norway)
|TSX Composite Index (Canada)
|Stock Market Index (Indonesia)
|FTSE 100 Index (United Kingdom)
|Dow Jones Industrial Average (United States)
Source: Based on data from Alanna Petroff, “The Best (and Worst) Stock Markets of 2016,” CNNMoney (30 December 2016): http://money.cnn.com.
But according to the Edelman results, there are still clear gaps when looking at trust building attributes ranked by survey respondents. In the following chart, the blue bars indicate the level of importance respondents placed on the individual attributes. The green bars show how frequently those attributes are being observed in practice.
Just as improvements were observed in the trust of individual industries, the gaps between what is important and performance narrowed in the 2017 results, as shown in the following chart. The narrowing was created through improved observed performance and not a decrease in importance. So it appears that firms are hearing the message that how they conduct their business is important to clients.
To Increase Trust, Demonstrate a Commitment to Ethics and Integrity
The report outlines a new operating model for these institutions. Those in authority can no longer make decisions “for the people.” Today, the report calls for authority to work “with the people” by considering all stakeholders in the decision-making process.
At CFA Institute, we are seeing firms demonstrate a commitment to holding the interests of clients as paramount through steady submissions of claims of compliance with the CFA Institute Asset Manager Code and the Global Investment Performance Standards. The numbers continue to grow of globally recognized firms and individually owned and operated advisory businesses committing to these standards that promote transparency and ethical practices. And each year, compliant firm’s review elements of their compliance policies and procedures to be sure they remain in compliant. The process also requires employees to engage in some form of code of conduct review or training.
Consider becoming the next firm to align its procedures with these globally recognized standards. That commitment may well provide the guidance needed for an employee that faces an unanticipated ethical dilemma.
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