Thursday, March 29, 2012

Many Financial Services Firms Flunk PR, Survey Says

While more than three in four (77%) financial industry communications and marketing professionals feel their company’s reputation will improve this year, many challenges remain, according to a survey of 150 communications and marketing executives at leading financial institutions, commissioned by Makovsky + Company, and undertaken by Echo Research in February and March of this year.

Chief among the issues they face: negative public perception, which was cited by nearly eight in ten (78%). This is most likely the result of the lingering aftermath of the financial meltdown in 2008, which led to “The Great Recession.” This is borne out by the fact that nearly all of our respondents (96%) said that financial services companies invited negative public perception because of their actions or inactions.

I noted with interest that 74% of those we polled believe that increased regulations of the financial services industry will help their firms improve reputations and trust with customers faster.

This point is both interesting and disturbing. It suggests that their reputations will improve due to external forces (in the form of increased regulation) as opposed to initiatives undertaken by the industry itself and its participants to bolster their reputations.

Should a company’s reputation be left to outside forces? I don’t think so. A company’s reputation is forged by its actions and should flow from its leadership.

Related to this is the fact that the industry and many of the companies in it could be doing a better job, from a public relations standpoint, if they are going to overcome the disease of distrust. In fact, 57% of those polled graded the industry's public relations efforts as “average,” “below average” or “failing."

It is at least heartening to note that most respondents believe their departments will grow in importance in the near term.

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Blogger Michael Pang said...

Very interesting revelation about the 74% who think increased regulation will help firms improve reputation and trust.

I actually think that is a great revelation because it means that firms are open and willing to be regulated by the government for the greater good. While it is great if a company is proactive in bolstering its reputation and practices, there is only so much a firm can brag about itself. Just think about it from a consumer watching an advertisement from a firm selling its own product versus a 3rd party review of the product. The ad will not address any issues or problems and will not be objective. A 3rd party will be objective and point out pros and cons.

I think this is the same with regulations and firms' reputation. A firm can promote itself all it wants but how believable is it? However, if a regulation was instated, the government is putting its credibility to validate or invalidate any firm. It means that it's just not the firm saying it; someone else is backing it up. Also, having regulations would create a level playing field; if it was all voluntary, only the good samaritan companies would adhere while the cheaters would freeride or get away from any obligations they should have.

While it is great for firms to be proactive, I don't think self-regulation is the answer. Just look at what's happened in the financial crisis; firms were allowed to regulate themselves and the oversight was sloppy or non-existent. In the long run, it pays to have a fair and regulated environment for all firms to obey and operate in.

Friday, March 30, 2012 12:59:00 PM  

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