Trust is a commodity which has been in short supply in the financial services industry of late and not being shy retiring types at Broadgate Mainland we thought we would tackle the issue head-on at our first Scottish seminar, held in Edinburgh during the last week of April. The question we posed our panellists and attendees was: “What can the financial services industry do to rebuild trust with investors?”
Our panellists were: Colin McLean of SVM; John Moore of Brewin Dolphin; Stephen Moore of Julius Baer Investment Products and Alistair Hall of Ignis Asset Management; and the event was chaired by Richard Romer-Lee of OBSR.
Over thirty industry and public sector opinion formers joined us to question the panel and hear their words of wisdom, and several views on ‘trust’ came out. Communication emerged as a big theme with the panellists. Alistair Hall, from Ignis Asset Management, pointed out that it is as important – if not more so – to communicate with clients when things aren’t going too well as when they are. He added that where the industry got things really wrong in 2008 was in managing customers’ expectations.
Longevity – or lack of it – was another issue which the panel agreed dissipated trust. Colin McLean felt that there was too much “chopping and changing of fund managers and stocks”; and chairman Richard Romer-Lee wondered how we can expect customers to invest for the medium to long term (widely accepted to be around the five to seven year mark) when most fund managers don’t even last the course that long. OBSR has some interesting research to back this up.
Education emerged as another big theme with general agreement that it needs to be improved both to end customers, and to those involved in the selling or advising of products. Interestingly, Stephen Moore pointed out that education was often an uphill battle in the UK. He spoke of seminars he had been involved with throughout Europe, which had been fantastically well-attended, until it came to the UK, where it was a struggle to get anyone through the door.
The view from the front line from wealth manager John Moore of Brewin Dolphin was that to start rebuilding trust you have to be sure that you have hit the bottom of the market – and maybe we have not yet. He believes that we should stop “fashion following” – jumping on the latest bandwagon; and above all investors should use their vote – whether they are invested in a fund or directly in shares. If you don’t like what your company is doing – vote. Even if you don’t change things, at least you have registered your displeasure.
Transparency and clarity in products or services is important to gain trust. People need to understand what they are buying or getting in to. Trail commission is as contentious as ever, with one panellist pointing out that it is a bit immoral to be taking more money from the customer than he or she is actually making.
Colin McLean felt that the industry would do well to take a leaf out of the medical profession’s book when it comes to standards – and I think he is right. This could be the strong dose of medicine required to return the industry’s reputation to a clean bill of health.
The honesty and openness of the debate was refreshing. A question from the audience suggested that perhaps the media was in some way to blame; a notion which was quickly quashed by the panel – and I liked the fact that this showed we are not always looking for a scapegoat.
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