By Michael Byrnes
The financial service industry has an image problem, and it would be smart for industry leaders to not hide their heads in the sand, according to industry observers.

"We need to stay focused on the fundamental principle of our business-earning the trust and confidence of those we serve," said Randy Snook, executive vice president of business policy and practices for the Securities Industry and Financial Markets Association, in his opening remarks at the SIFMA Private Client Conference. "Personalized investment advice is more critical and more valued than ever before."

Earning back trust was a common theme during the one-day conference. It was stated clearly in multiple presentations by industry leader after industry leader to the 200 senior executives in attendance.

Kathleen Murphy, president of personal investing at Fidelity Investments, said, "Multiple consumer surveys suggest there has been a basic change in attitudes toward financial service providers. For example, the 2011 Global Monitor study, from The Futures Company, concluded that 52 percent of the U.S. respondents don't trust financial institutions."

She also shared a CNN poll that asked, 'Do you trust Wall Street bankers and brokers to do what is best for the economy?' Murphy said, "In 1990, 30 percent said they did not trust Wall Street bankers and brokers. That is not encouraging, but not nearly as bad as the 54 percent of respondents from October of last year who said they do not trust Wall Street."

Bill Dwyer, president of national sales and marketing at LPL Financial, reminded the attendees that he saw this trust issue back in the 1980s, when brokers were ranked similarly to used car salesmen and the character Gordon Gekko from the movie Wall Street did further damage to the industry's reputation.

Dwyer was positive about the future though, calling this new era "the golden age of advice."

"We can't lose focus of what we do well," said Richard J. Franchella, managing director of Morgan Stanley Smith Barney's New York region, as he reminded the attendees of how this industry has helped many successfully retire over the years.

John Thiel, head of U.S. wealth management and the private banking and investment group at Merrill Lynch Wealth Management, went even further in saying, "What we do is noble. We deliver peace of mind."

"Trust was not just eroded by what happen in 2008 and 2009," Thiel said. "There have been lots of things." In talking about Generation X, he said, "We are at risk of losing an entire generation of investors." He explained how from 2000 to last year the return from the S&P 500 has been basically zero.

"We have to redeem the trust," said Thiel. "This is the age of the customer." He encouraged the industry to ask itself, "How are we going to position our advisors for the future?" 

"We need to make sure that our standard of care is delivered from first to last," he concluded.

John Taft , CEO of RBC Wealth Management U.S., stressed the need for "stewardship" and putting the clients first.

One potential solution to the trust issue, speakers said, will be when the industry comes to some agreement on how to best serve investors. Chet Helck, executive vice president and CEO of the global private client group at Raymond James Financial, said, "If you are putting your clients above yourself and your company then you are a fiduciary." He pushed attendees to think about how a good parent takes care of a child and noted the industry should similarly look out for its investors.

"We stand at the inflection point," he said. Comparing advisors to medical doctors, he added, "We need to have a process that makes sure our financial advisors cover all the bases."

"We still need to do a whole lot more. We need to look at this through the lens of the frustrated investor," said Murphy. "We have a fundamental responsibility to help our clients be better prepared and better educated so they get better results. We need to earn their trust by actions-not by asking for it, not by advertising. We need to invest in our clients so they will invest in us."

Mike Byrnes founded Byrnes Consulting to provide consulting services to help advisors become even more successful. His expertise is in business planning, marketing strategy, business development, client service and management effectiveness, along with several other areas. Read more at www.byrnesconsulting.com.