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Insights from the Edelman 2016 Trust Barometer

Investment insight | Jeremy Spira | May 23, 2016

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Edelman recently published their 2016 trust barometer. The bad news, for those of us working in financial services, is that the sector was once again least trusted among the sectors surveyed. The good news, however, is that trust in financial services appears to be increasing: up from 43% in 2012 to 51% in 2016. At the Thinking Ahead Institute’s Cambridge roundtable in November last year, attendees identified trust as the key priority for improvement in the investment industry. This sentiment was echoed in an address by Citigroup CEO Michael Corbat, when he said “In the end, we can’t do our jobs if we fail to gain and retain the trust of the people and communities we serve around the world.” However, the conversation at Cambridge also recognised that improving trust is hard to achieve directly, hence the industry needs to demonstrate its commitment to meeting investor objectives at a price commensurate with the value added (alignment, value and efficiency). Edelman assert that the financial services industry is at a critical juncture, facing disruptive pressure from new entrants (fintech players in particular), increased regulation and societal censure. However, Edelman also recognise that opportunities exist for the sector to play a meaningful role in stimulating growth and alleviating a shortfall in infrastructure capacity. A major theme of the 2016 report is the inversion of trust: there is a widening trust gap across the board between the “informed public” (c.15% of the population – typically more trusting in the institutions of government, business, media and NGOs) and the “mass population” (85% – less trusting). This is particularly acute for financial services, where the trust gap is 18 percentage points in the US, 12 in the UK and 10 in Australia. They highlight five ways in which the industry can manage trust issues:
  1. Build on “trust momentum” by improving communication and engagement with clients.
  2. Recognise the trust gap between the informed public and the mass population, and targeting trust-building efforts at the latter.
  3. A startling statistic is that, while financial services is the least trusted sector among the general population, it is the most trusted sector among employees of financial services companies. This suggests companies should seek to leverage their employees as positive advocates.
  4. The case for increased trust in financial services is more compelling when firms can demonstrate their contributions to society. As examples Edelman mention the areas of income inequality and public policy.
  5. Firms need to focus on trust-building behaviours, the three most important being: protecting consumer data, transparency in social responsibility, and keeping people and their families safe.
Overall, while the report confirms financial services as an industry lacking in trust, it points the way to actions that might improve this. The most notable of these, in this year’s report, is the theme of democratising services – to become more trusted and relevant, financial services needs to prove its integrity to the entire population, not just the financially literate. The Edelman report is an interesting read, and you can access it here.

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