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Public Relations Reputation Management Crisis Management

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Building up trust concept: Black alphabetic letters forming the

What does it take to win consumer trust in our industry?

The history of trust between financial institutions and their customers is an uneasy relationship.

An enduring challenge for professional marketers of financial products and services is to operate within such constraints and find true legitimacy. It is also an environment where genuine effort can be regularly tripped up by failure - one of your own hand or that of somebody else unrelated to your business, your product or your brand.

Failure can arrive in the form of anything from a poor investment decision through to a deliberate and outright fraud. These are real and present risks.

Consumer trust in financial services is a fragile patchwork quilt stitched randomly together over the years.

As a story it goes something like this: hey, markets are great, the money's flowing in and we're building a real sense of connection - fledgling trust - based on our brand, our performance numbers and service levels. You know we really are doing what we say we will. But wait, over there is a big nasty failure - ouch - watch out, the collective 'we' are about to be smashed with a reputation sledgehammer. OK, let's scramble, react to the regulators, hose down the researchers and actuaries, hope the media leaves us alone and we stick our heads down. Back to the grind-stone, adjust our product line-up. Fix our product features, our remuneration structures and sack the marketing team. We begin again. And what follows is a gradual re-build of trust, rising in time to (hopefully) even more success...But wait, not again, out of nowhere comes yet another unexpected failure...

So the one step forward, two back scenario is most marketer's nightmare. I say most because there are a few squeaky clean operators who with hand on heart can sail through most unforeseen circumstances with a clear conscience. Hello to all the ESG fund managers and index managers reading this blog!

Anyway, the moral of this tale is that environmental risk is a big factor in an industry which relies on trust as a key building block of its license to operate.

But the unexpected failures are doubly painful because often the fail has nothing to do with the business we operate or the products we manage. Of course these details matter little to the average consumer, who remains unaware or uncaring about the nuance and underlying technical reasons behind a financial failure. All they read is the big headline, see the large numbers - and find proof that the industry is again caught out ripping off the little guy.

Question is: how do we change that little voice in the back of the head of customers? The nagging voice of doubt which says: "do I trust these people to do the right thing with my money? I hope they aren't a bunch of crooks. I hope I get to retire well with my savings intact."

So it was that last week's release of a Treasury report into Australia's largest ever superannuation failure - the Trio Capital fraud - ushered in the industry's latest reputation challenge.

The Treasury investigation into the regulation surrounding the Trio fraud landed lightly as a 24 page report and a new high water mark of Australia's largest ever superannuation swindle. (By the way, is it just me or is that an incredibly slim response to a record fraud that siphoned off roughly $176 million? In other words each page of the Treasury document response represents roughly $7 million in investor losses?).

In any event, will the average superannuation fund member understand that this was a highly complex fraud, disguised for years, and committed in offshore places beyond the reach of Australian regulatory authorities?

Or will people just recall that ordinary superannuants - almost all of them with self managed super funds and no adequate fiduciary protection - lost their dough in what amounted to a sophisticated ponzi scheme?

You be the judge, but for mine I am going with the latter. And good luck to all industry participants - the regulators and Government legislators included - in the ongoing task of winning consumer trust of our industry.

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