The fund management industry has been hit by an indiscriminate collapse of trust in banking and investment and inspires less confidence among the public than the police or UK health service.
The fund management industry in the UK has been hit by an indiscriminate collapse of trust in financial services and inspires less confidence among the public than the police or UK health service, despite both latter sectors being hit by scandals, a new survey shows.
The asset management sector, which arguably played little or no
role in the financial crisis, appears to be the least trusted of
all financial services segments, according to a PricewaterhouseCoopers
report, How financial services lost its mojo – and how to
The report is based on analysis of a survey of over 2,000 people across the UK.
Only 12 per cent of people trust fund managers and only 5 per cent trust them more than a year ago; some 28 per cent trust financial advisors and 6 per cent trust them more than a year ago.
“The need for asset managers to engage directly with their customers and to raise the level of understanding in the relevance of their products is essential if the asset and fund management industry is to have the continued relevance and importance in the 21st century as it has held in the past,” Mark Pugh, UK asset management leader at PwC, said of the report’s findings.
The loss of trust in financial services, including wealth management, has been a theme ever since the 2008 financial crisis and there have been countless comments, speeches and conferences to draw attention to the issue and how to fix it. This publication understands that one problem is that so many members of the public simply cannot or will not discriminate between those services directly linked to the crisis - such as the mortgage-backed securities sector and central banks - and those further afar from it, such as asset managers and insurance.
The low trust in fund manager firms contrasts with the 53 per cent of respondents who said they trusted the police and 79 per cent who said they trusted nurses in the UK’s state-run National Health Service. At first glance this appears unjustified: both the police and NHS have been hit by scandals in recent years concerning issues such as alleged involvement of some police officers in the phone-hacking scandal that led to calls for tighter regulation of the media; in the NHS, there have been notorious episodes such as the saga of poor treatment and high mortality rates in the Mid-Staffordshire region of the UK, for example.
The PwC also said that although almost one in two people (49 per cent) said regulation of the financial services sector has been strengthened in the wake of the crisis, a greater proportion (57 per cent) do not believe the reforms that have been implemented are sufficient to ensure that history will not repeat itself.
The survey suggests that consumers’ lack of trust is affecting all financial services sectors, not just banking, reflecting a generalised malaise across the industry. Fewer than one in three consumers now trust their bank, while for other types of financial services company, ratings are even lower. The fact that certain types of institution have been at the forefront of industry issues in recent years has not prevented other organisations, such as fund managers, from suffering reputational damage.
The asset management industry’s traditional response to concern about consumer mistrust has been to stress goals such as greater transparency. However, the survey suggests the impact of further work of this type might be relatively limited, at least in isolation. Though greater transparency is the single improvement most likely to rebuild consumer trust in financial services, even here fewer than one in two people (46 per cent) would be impressed by such changes.