A “Big Idea” for Financial Services: Put the Customer First

“The customer is always right” has long been the mantra of the retail industry. The financial services industry doesn’t have a catchphrase like that, but I know the one I’d choose: “Put the customer first.”

Our customers – who trust us to manage their money and help them realize their dreams – deserve no less than being our No. 1 focus. But across the financial services industry, that hasn’t always been the case.  In the wake of the 2008 financial crisis, financial services became one of the least-trusted industries around the globe. However, the 2016 Edelman Trust Barometer brought some good news: over the past five years, trust in financial services has risen more than in any other sector. Financial firms can build on that positive momentum by making a commitment to put their customers’ interests ahead of their own.

It’s vital that Americans regain trust in our industry. The sector drives substantial economic activity and serves as a catalyst for direct and indirect job creation. But beyond purely economic calculations, financial services firms play an important social role. The economist and Nobel prize winner Robert Shiller argues that finance is, in fact, one of the most powerful tools we have for solving common problems and increasing society’s well-being. In his book Finance and the Good Society, Shiller says that “financing is really creating the architecture for reaching a goal. The goals served by finance originate with us.” Those goals include everything from paying for college to buying a house to retiring with financial security.

In the current environment, our nation faces a number of financial challenges, from spiraling student loan debt to growing concerns about financial security in retirement. More than ever, Americans need help in achieving financial well-being throughout their lives – especially in retirement. Americans need to know that financial firms will help them meet these challenges in a way that puts the customers’ interests first.

A new government rule will help move the industry toward this standard. In April, the Department of Labor finalized its fiduciary investment advice rule, six years in the making, to address conflicts of interest in the provision of investment advice to retirement savers. It requires those who get paid to provide investment advice to adhere to a “best interest standard” that puts their customers’ interests ahead of their own. TIAA welcomes the new rule. Putting the customer first is a core value of our organization and has been throughout our nearly century-long existence. We believe the new rule is an important step toward helping more people build financial well-being.

“Put the customer first” may not be a new idea, but in the financial services industry, it qualifies as the kind of “#bigidea” that can be a game-changer – and its time has come.

The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons. Past performance does not guarantee future results.

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