The best way for the financial services industry to turn around negative public perception is to raise its standards for client care and elevate clients' interest above its own, the chairman of a major Wall Street trade association said Monday night.
Chet Helck, chairman of the Securities Industry and Financial Markets Association, opened the organization's annual conference in New York with a sobering assessment of low regard for financial firms, calling it “terrifically negative.”
“We have to be sure as an industry that we're acting in a way that establishes
trust and gives confidence,” said Mr. Helck, chief executive of the Global Private Client Group at
Raymond James Financial Inc. “We have to continue to challenge our associates in our firms to remember that putting clients first isn't just something we say, it's something we do every day.”
Last week, SIFMA launched an initiative designed to promote the financial industry's contributions to the U.S. economy, educate investors and encourage its member firms to act in their clients' best interests when providing retail investment advice.
Critics said that the effort could mislead investors into believing that brokers have a fiduciary duty to clients. Under current law, they meet a less-stringent suitability standard that allows them sell their firm's products even if they have higher fees than similar products sold by other firms.
Mr. Helck essentially encouraged SIFMA members to act as fiduciaries, even though he never mentioned that word.
“Put the client's interest ahead of your own,” he said.
It is up to individual firms to police their own brokers to ensure that they are adhering to high customer care standards, according to Mr. Helck.
Those who fall short should be targeted.
“We have to either train them, or we have to replace them,” Mr. Helck said. “There has to be zero tolerance for people who don't measure up to these standards.”
Such steps will help the industry overcome a deeply tarnished image among consumers, according to Mr. Helck.
“Earned or not, rightly or wrongly, it's terrifically negative, and we have to accept it as a reality,” he said. “That's the first step in recovering and moving forward.”
Also on Monday night, former President Bill Clinton told the SIFMA conference that the financial industry could bolster its image by being more open about regulatory changes it is seeking.
“Itemize them and make them public,” he said during a question-and-answer session with incoming SIFMA chairman-elect Jim Rosenthal, chief operating officer at Morgan Stanley. “There should be a much more transparent and specific set of suggestions about how laws can be improved.”
Mr. Clinton suggested that Wall Street could be more empathetic toward Americans who are struggling economically.
He noted that the median income, adjusted for inflation, has fallen since he left office in 2001.
“That's not true for most of you,” Mr. Clinton told the SIFMA audience.
“No matter how hard [most Americans] work, they're not going to get a raise,” he said. “Most people feel they can't breathe half the time.”
