With blue-chip companies, white-shoe investment firms, and money-center banks alike being hauled into court to answer a range of charges—from lying to shareholders to trading against clients—the reputation of the financial services industry has reached a crisis point. This Augean mess has affected our confidence in our advisors. In the past six months, three surveys of affluent Americans have reflected a growing disinclination to rely on financial advisors tied to large conglomerates, and a growing distrust of financial advice generally. A survey conducted last summer by the Spectrem Group, a Chicago-based consulting firm, revealed that one in five affluent households has switched advisors in the past three years. Most people cited a lack of trust as the reason for making the change.
"The banker’s calling is hereditary. The credit
of the bank descends from father to son."
—Walter Bagehot |
In the days when a firm’s most valuable asset was its good name, a Rothschild, Barings or Warburg would have been ruined by any one of the many scandals engulfing the banking and mutual fund industries today—and so those institutions maintained the highest standards of conduct and guarded their reputations closely. Today, financial services firms, with rare exceptions, are no longer brought low by scandal. In most cases, they deal honorably with these problems, dismissing those responsible and working to rebuild the trust of their clients and regulators. Even so, the reputation of the industry has suffered, as the Spectrem survey makes clear.
The lifelong, professional relationships that we build with our advisors and bankers—whether they work for themselves or for a financial services conglomerate—should be founded on trust. The advisors on our 100 Most Exclusive Wealth Advisors list (page 45) embody this belief. And the variety of firms they represent, both large and small, demonstrates that quality and commitment reside at all strata of the industry. The success of a financial advisor, in the end, depends on his or her individual expertise and honesty. Shifts in the markets or in our families or goals will sorely test any relationship over time. But if we believe that our advisors are acting in our best interests, we will more easily weather these challenges and find ourselves well placed to achieve our financial aims.
Dwight Cass
Editor-in-Chief  Back to January 2004 Table of Contents
|
