96% of Financial Pros Say Industry Has a Trust Problem
Tuesday, January 13, 2015
Financial services providers agreed almost unanimously that the public doesn’t trust the industry, and they appear to be shouldering most of the responsibility for that lack of trust.
According to the CFA Institute’s Global Market Sentiment Survey, 63 percent of professionals — that includes portfolio managers, research consultants, advisors, consultants and C-level executives — said lacking an ethical culture was the factor contributing most to the public’s lack of trust in the industry. Sixteen percent put the blame on ineffective government regulations.
Just 4 percent of respondents said there was no trust problem in financial services.
Since the problem is within firms, the solution is as well, according to respondents. Over 30 percent said the best way to build trust with the public was to better align professionals’ compensation with investors’ objectives. The second most popular solution was for management to establish a zero-tolerance policy for ethical breaches.
What’s interesting is that financial professionals indicated they themselves had concerns about market integrity. Just 28 percent reported a positive outlook on that score. Insider trading was the biggest concern (25 percent said this was the biggest fraud issue facing markets).