State of Finance: Why We Must Rebuild Trust in the Financial Services Industry

In this series, professionals debate the state – and future – of their industry. Read all the posts here and write your own (use #MyIndustry in the body of your post).

The good news: banks and financial services firms did not place last in the 2015 Edelman global ranking of trust in industries (as they had done the four previous years.) The bad news: they came in second-to-last, besting only the media industry.

It’s hardly surprising that financial services has become one of the least-trusted industries in the world. For one thing, people have yet to forgive the industry for its role in the financial crisis. In the years since, the industry has seen additional scandals that have left many wondering: “What have they learned?”

The industry has much work to do to rebuild trust and restore Americans’ confidence that it puts clients’ interests before its own. Some think rules and regulations are the answer. To be sure, they are critically important, but they are not enough.

The most ethical and responsible firms are that way not just because they follow a fixed set of guidelines and rules, but because of how their people actually behave. And that behavior is driven largely by values and culture that permeates through the company, leading people to do the right thing even when nobody is looking. That’s why at TIAA-CREF, we put as much focus on our values and culture as we do on our structures and processes. We know that our values – put the customer first, value our people, act with integrity, deliver excellence, take personal accountability, and operate as one team – helped build the trusted reputation we’ve had over nearly a century, and they are the key to maintaining it.

Leadership is a critical part of the equation, because the tone is set at the top. Institutions can have strict rules and detailed processes, but if they have leaders who act without transparency and integrity, they won’t have a culture that promotes doing the right thing.

It’s essential that financial services firms work hard to win back the trust of the American people. The industry is simply too important to our economy and our global competitiveness to be looked on so warily by so many. Moreover, it has a key role to play in Americans’ financial well-being. If you think about it in terms of the lives of average Americans, the industry makes possible everything from writing checks to pay rent, to saving for college, buying a house, and building a secure retirement for example.

In today’s increasingly complex world, Americans face serious challenges in their financial lives: high levels of student debt, low levels of financial literacy, and inadequate retirement savings, to name just a few. They need a strong and trusted industry that is focused on developing innovative solutions, and providing advice and education programs that truly help Americans achieve lifelong financial well-being. With the lessons of the crisis still fresh and clear, my hope is that our industry will step up to this challenge, and make a sustained commitment to client-focused values and do-the-right-thing cultures. With that, we can begin to move up those trust rankings again.