The 2014 Makovsky Wall Street Reputation Study was published on Tuesday, June 17th. The study suggests that the hangover from the financial crisis and the public perception of continuing malfeasance in the financial sector are major drags on the financial services sector. According to the study, 81% of financial services companies surveyed are still suffering from “reputational and customer service issues”.
Reputational issues damaging Wall Street’s business
Financial services firms on Wall Street were riding high, both in terms of profits and public perception back in 2007, but the financial crisis that engulfed the international economy over the next few years completely changed that. Not only did investors of all sizes lose billions of dollars, Wall Street execs tried to cover up or minimize their role in precipitating the financial crisis. Once regulatory investigations made it clear that that major financial institutions had been engaging in systematic deception and fraud for several years preceding and during the financial crisis, the reputation of the financial sector dropped to all-time lows.
The 2014 Makovsky study reports that the financial services firms surveyed reported an average business loss of 27% over the last two years. Furthermore, the reported business losses were significantly higher in the 2014 report compared to the the 2013 report.
Top reputational issues
Respondents to the study were asked to list and rank the reputational issues that most impacted their firm over the last year. The top three responses from the communication, marketing and investor relations execs at these financial services firms were a negative perception of the financial services industry (64%), publicity surrounding regulatory investigations and lawsuits (55%) and capital and liquidity challenges (53%). More than 52% of respondents also noted that financial performance and excessive bonuses had hurt their reputation, and almost exactly 50% reported customer dissatisfaction and corporate governance as negative factors.
All of these percentages have increased from the 2013 study.
Greatest reputational challenges for the next year
In terms of the greatest challenges Wall Street marketing execs feel their firms face in the next year, the number one issue was differentiating themselves from other firms with serious reputational issues. The second most frequently mentioned challenge was improving the reputation of the company to improve sales (300% increase from 2013), and third most was rebuilding trust in the overall financial system. Increasing awareness of stakeholders came in fourth, and was up more than 200% from the 2013 survey.