Canada may have been spared the worst effects of the Global Financial Crisis, but six years on, its powerful legacy continues to haunt all financial services firms. One word sums up the sector’s biggest problem and its greatest opportunity. That word is trust.
Omer Soker, a corporate speaker, trainer and the founder of The Ethics of Success Corporation, explains in his book The Trust Future, how trust can be the competitive advantage of your firm:
Capitalism runs on trust, and it was a lack of trust that brought the system to its knees during the financial crisis in 2008. Ironically, it was a lack of trust permeated between the very financial institutions – both government and private sector – whose role it was, and still is, to serve as our fiduciaries.
But it is the financial services industry that has taken the biggest hit in terms of trust. Part of this is logically due to the role it played in the crisis, which still bears its ‘financial’ name.
Secondly, the fiduciary nature of the industry’s relationship with a customer’s money adds considerable weight to the responsibility it has to act in a trustworthy manner, which raises both expectations on behaviour and condemnation for breaches.
Added to this, customers have witnessed incessant financial scandals throughout 2012 including:
- Allegations of mortgage fraud at Deutsche Bank
- Money laundering at HSBC
- Libor manipulation at Citi and Barclays
- Rogue traders at UBS, and of course;
- The infamous Muppet Manifesto at Goldman Sachs
Is it any wonder they distrust whether the industry has learned any lessons? Not only has reputation suffered, so too has perceived performance and perceived behaviours.
What does this mean for wealth professionals?
How can they navigate the turbulence of Future of Financial Advice (FoFA) reform in the sector, drive demand during a period of economic uncertainty and avoid the threat of additional regulatory burdens in the future?
On a bigger scale, how can they distance themselves from the unethical behaviours of commission-focused advisors who breached their fiduciary duties in the past?
Trust is measured not only in terms of reputation, performance and behaviour, but also in the specifics of transparent, fair and objective customer engagement. It provides an exceptional opportunity not just to restore the lost trust in the greater system, but use the creation of trust through responsible advice catering to a new breed of switched-on consumers.
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