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Competing financial services firms advertise their products, yet most investors have little expertise in evaluating their products or advisors. Investors are left to accept on faith what they are told. But the plague of distrust that permeates views of finance can make this very hard.
Finance is hardly alone. A new entrant in the battle to defeat distrust may surprise many: the U.S. Supreme Court. Three justices’ recent remarks offer a model for financial leaders.
In separate speeches, Justices Amy Coney Barrett and Clarence Thomas recently joined Justice Steven Breyer in defending the independence and integrity of the Supreme Court.
Each justice stated clearly that stories portraying the court as partisan are inaccurate. Each justice acknowledged that the court’s lower rating of trust and confidence is related to the public’s perception of partisanship.
What did the justices do? They acknowledged the importance of public trust to the court and the country. Then they explained why they disagreed with critics who argue that the court is partisan.
They care about the country and its justice system first and foremost. They greatly value the power and responsibility entrusted to them to protect it.
Justice Breyer started the conversation earlier this year when he spoke at Harvard Law School and warned against expanding the court and generally labeling it as “conservative.”
The justice said, "It is wrong to think of the court as another political institution," and it is, “doubly wrong to think of its members as junior league politicians." The overriding message is that, “structural alteration motivated by the perception of political influence can only feed that perception, further eroding that trust,” he said.
Justice Breyer argued that the court is not divided by political polarization as much as by differing judicial philosophies and these differences can often be accommodated to form a consensus. The hard work of consensus-building is key. Specifically, Breyer pointed out that engaging with those with whom you disagree, “Is what democracy looks like.”
Justice Thomas argued that while the court has flaws, decisions are not based on “personal preferences” and that these public misconceptions about justices will “jeopardize any faith in legal institutions,” according to the Washington Post. The justice pointed to media reporting: “I think the media makes it sound as though you are just always going right to your personal preferences.”
Meanwhile, Justice Barrett spoke bluntly to a Kentucky audience saying, “My goal today is to convince you that this court is not comprised of a bunch of partisan hacks,” a local new story reported. Instead, “competing judicial philosophies” are at play. The justice also pointed to how the media reports decisions, leaving it to readers or viewers to rely on the results of decisions and not the legal reasoning.
The Justice’s remarks offered lessons for leaders in finance. They link the court’s lower public trust today to the public perception of partisanship. Some of these perceptions may be due to the justices' own behavior and words.
The Justice’s candid remarks affirm that public trust and confidence is essential to public acceptance of decisions from the Supreme Court. As oxygen is essential to life.
Top leaders in finance can learn from Justices Thomas, Breyer and Barrett. They might learn how public trust matters to the market economy and capital markets as much as it does to the justice system and Supreme Court.
Or that bringing trust out of the closet and speaking with candor and honesty is a good thing. This includes acknowledging weaknesses and mistakes.
It is time finance leaders admit that trustworthiness is nonnegotiable and their common interest. Justice Breyer and Justice Thomas or Justice Barrett may clash over judicial philosophy. Yet maintaining public trust rules.
This is not like discovering a new cure for COVID or convening a task force or commission. This is acknowledging errors, speaking plainly and truthfully and acting with integrity and transparency. This is leadership. .
This past year has been a time of great change -- Now is a time of great opportunity for finance leaders. . Supreme Court justices of different judicial philosophies have shown a way forward.
Tamar Frankel may well be the godmother of fiduciary law in the West. Born in Israel, Professor Frankel earned her first legal certificate in Jerusalem in 1948. An L.L.M. and S.J.D followed from Harvard Law School in 1964 and 1972. For 48 years she taught generations of students and regulators while writing extensively at the Boston University School of Law. Today professor Frankel is professor of law emerita.
Knut A. Rostad, MBA, is the co-founder and president of the Institute for the Fiduciary Standard, a nonprofit formed in 2011 to advance the fiduciary standard through research, education and advocacy.
Read more articles by Tamar Frankel, Knut A. Rostad
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
