Trust in the securities industry must be restored or a sluggish economy will not recover.
That’s what officials of the Securities Industry and Financial Markets Association (SIFMA) said in a series of 2013 preview sessions.
“Public trust and confidence is job one and job two and job three,” said Chet Helck, chairman of SIFMA and ceo of Raymond James.
Helck’s outlook comes as SIFMA is projecting a so-so economy.
The SIFMA Roundtable of Economists forecast that 2013 will not match the 2.2% GDP growth expected for 2012. The group predicted growth this year will be 1.9%.
“Unemployment was expected to remain at elevated levels throughout 2013, similar to those forecasted in 2012,” according to the roundtable, which expects the unemployment rate to range between 8.1% and 7.7% this year. The inflation rate should again be in the 1.6% to 1.8% range, the economists said.
Helck said restoring investor confidence is important not just for the health of the industry, but for the health of the economy. That means helping people feel comfortable about spending and investing more, he said.
Public confidence in the securities industry, Helck said, is “a lense [for] everything we do. How will it affect confidence in our markets and our systems of government, in our economy? How will it make a person feel about buying that home or an employer in hiring that next person?”
What should the securities industry do to convince investors that the industry is working for it? Helck said the industry must do a better job of managing risk.
“You can’t eliminate risk from the world. But to have confidence, you have to manage risk effectively,” Helck said. Managing risk, SIFMA officials added, also means requiring regulators to demarcate the exact legal responsibilities of various financial professionals. Traditionally, this has meant defining which professionals have fiduciary responsibilities.