Investor Trust in 2021 – No Longer Hitched to Wall Street?

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This is the second of two articles on the state of investor trust. Read the first one here.

Fiduciary, from the Latin fiducia, means trust. In this article, I contemplate the promise of a new paradigm for earning investor trust.

Previously, I wrote how investor trust in 2021 is stuck at the low levels of 2009. It is in the basement of occupational trust levels, just above car salespeople, according to Gallup. Meanwhile, the financial industry’s deafening silence remains.

But there are exceptions to this silence. Phil Edelstein recently offered good pointers on marketing tactics to build trust. The ever-witty Sara Grillo drilled down to a cornerstone of low trust – half-truths and disinformation. Grillo noted how much better the industry would look, “If advisors were willing to tell the whole truth instead of virtue signaling.”

The CFA Institute’s trust surveys have offered excellent guidance on what retail investors want. Full fee disclosure and conflict candor top the “to do” list for advisors.

Two industry leaders waded into trust waters in February 2019: TD Ameritrade CEO Tim Hockey and Pershing Advisor Services CEO, Mark Tibergien. Both executives have since departed their posts.

Tibergien noted one reason many young people avoid the financial services industry: They believe it’s “corrupt.” Sadly, young people are hardly alone. A Laboton Sucharow 2013 survey of financial services employees revealed that more than half believed their competitors engaged in illegal or unethical conduct.