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The trust trapRebuilding trust in the aftermath of the GFC
March/April 2010
2
Escaping the trap
The ingredients
of trustWho cares? Our report
cardOur trust
campaigns
Lessons from
mouthwash
Top 5 strategies
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A multi-pronged research approach underpins our findings
Desktop analysis Field research
Investment Trends syndicated reports
Insights and impact
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IN THEIR OWN WORDS...
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INGREDIENTS OF TRUST
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Trust me
Reliance on another person or entity.
Explicit
Implicit
A belief or confidence in the honesty, integrity, reliability of a product, service, brand or person
Having faith in others and believing them.
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We’re hardwired to trust
We trust people who are similar to us
Physical touch
Oxytocin
Transitive trust
Illusion of personal invulnerability Unrealistic optimism
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The 4 ingredients of trust combine head with heart
Credibility Reliability Intimacy Self-orientation Trust
Rational Emotional
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The most trusted brands in Australia
Free from scandal • Reliable • Safe • Deliver on promises
Readers Digest Magazine 2009
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Cluster analysis revealed four groups of trust factors
Investment Trends Pty. Ltd March 2010 Trust Mini Report
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Open about fees, reliable, tenure and real people
Investment Trends Pty. Ltd March 2010 Trust Mini Report
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Reliability is king
Investment Trends Pty. Ltd March 2010 Trust Mini Report
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Those who cited “they understand my specific needs” as the main factor for trust generally had a higher income
Q3 Which of the things you selected above is most likely to make you trust a financial service company? (Bubble size represents % selected as most likely)
Customer for a long time, 13%
They do what they say they will do, 21%
Open about fees, 12%
Keep in touchregularly, 4%
Admit when they get it wrong, 4%
Make me feel special, 0% Understand my
specific needs, 6%
Referred to me by someone I trust, 5%
Talk to me in a way I can understand, 3%
I can contact them and talk to a person, 9%
Been around a long time, 4%
Owned/affiliated with a major bank, 4%
Large organisation, 3%
An Australiancompany, 2%
No bad press, 2%
Other,5%
0
500
1,000
1,500
2,000
30 50 70 90 110 130 150Q72 Personal income per annum, before tax ($'000)
Q74
Tot
al in
vest
men
t por
tfolio
siz
e? ($
'000
)
Investment Trends Pty. Ltd March 2010 Trust Mini Report
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Big v small
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Simplicity and transparency – the dominant trends driving consumption
Uncomplicated services
User-friendly
Simplify their lives
Demand for
simplicity Punish the perceived sources of their dire circumstances
Outrage over corporate malfeasance
Backlash against unethical or ineffective companies
Focus on the
boardroom
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WHO CARES?
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Because it hits the bottom line
Series1
-100 -50 0 50 100 150
-17%
-34%
0
-72%
-77%
26%
42%
55%
76%
91%
- +
Refused to buy their products/services Chose to buy their products/services
Criticised them to a friend or colleague Recommended them to a friend or colleague
Paid a premium for their products/services
Shared negative company opinions/experiences online Shared positive company opinions/experiences online
Sold shares Bought shares
2010 Edelman Trust Barometer
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Because the world has changed
Employee/CEO blogs
Dialogue with stakeholders
Visible CEO
Socially responsible
Good employee relations
A well-known brand
Fair pricing
Strong financial performance
Attentiveness to customer needs
Quality products and services
12%
23%
23%
33%
35%
37%
38%
42%
47%
53%
2010 Edelman Trust Barometer
Financial returns
Top leadership
Innovator
Prices fairly
Good corporate citizen
Treats employees well
Communicates frequently
High quality products and services
Company I can trust
Transparent and honest practices
45%
47%
48%
58%
64%
72%
75%
79%
83%
83%
U.S 2006 U.S 2010
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Because it’s out-pacing performance
Investment Trends 2009 Investor/Member Communications and Retention Report
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Because it’s the new criteria for choice
4 most important
things
Honesty 55%
Good communication 48% Low fee/cost 39%
Experience/expertise 37%
Investment Trends 2009 Advice and Limited Advice Report
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Because investors will leave
Investment Trends 2009 Investor/Member Communications and Retention Report
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OUR REPORT CARD
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Financial services companies have a job do to
Media companies
Insurance
Banks
Entertainment
Automotive
Pharmaceuticals
Energy
Health care industry
CPG manufacturers
Retail
Biotech
Food
Technology
27%
29%
36%
35%
32%
39%
39%
41%
53%
47%
60%
56%
72%
32%
32%
33%
41%
45%
45%
50%
50%
57%
61%
62%
64%
81%
20102009
2010 Edelman Trust Barometer
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Let me check with the bartender before I invest
Most trusted
• 1. Ambulance officers
• 2. Firefighters• 3. Nurses• 4. Pilots• 5. Pharmacists
Least trusted
• 37. Psychics/astrologers
• 38. Politicians• 39. Car salesmen• 40. Telemarketers
Admirable mentions
• 23. Plumbers• 24. Accountants
• 27. Bartenders• 28. Financial
planners
• 33. Professional footballers
• 34. CEOs• 35. Sex workers
Readers Digest: Australia's Most Trusted People 2009
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Trust has eroded further, despite market gains
Investment Trends 2009 Investor/Member Communications and Retention Report
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The blame game haspolarised investors
At the same time investors are taking a more active role
• Taking responsibility to obtain information• Using advisers as sounding boards
Blamers
• Older• Wealthier• SMSF• Advised
Faithfuls
• Younger• Retail
fund members
Investment Trends 2009 Investor/Member Communications and Retention Report
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Trust differs across generations
020406080
Gen YGen XBaby boomer
Investment Trends 2009 Investor/Member Communications and Retention Report
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Younger people trust more...
CEO or other senior executives of a financial services company
Host of a cable television show on investing
Corporate communications
Portfolio manager
Friends or family
Broker/advisor
35-6425-34
75%
57% 73%
66%
53% 59%
40% 56%
33%
30% 39%(Same for both age groups)
2010 Edelman Trust Barometer
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Q3 Which of the things you selected above is most likely to make you trust a financial service company? By Generation
0% 5% 10% 15% 20% 25% 30% 35%
They do what they say they will doI have been a customer for a long time
They are open about their feesI can contact them and talk to a person
They understand my specific needsThey were referred to me by someone I trust
They admit when they get it wrongThey keep in touch with me regularly
They are owned/affiliated with major bankThey have been around a long time
They talk to me in a way I can understandThey are a large organisation
They've had no bad pressThey are an Australian company
I know what to expectThey make me feel specialThey give me good returns
Other
All survey respondents [n=222] Gen Y [n=34] Gen X [n=90] Baby boomer [n=57] 65+ [n=42]
...and not just their Facebook friends
Investment Trends Pty. Ltd March 2010 Trust Mini Report
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IN THEIR OWN WORDS...
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OUR TRUST CAMPAIGNS
From big to more
Empowering and tenure
Trust 101
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Q5 How likely are you to believe the following statements from a financial services company? All respondents [n=222]
16%29%
19%35%
43%34%
41%29% 42% 43% 49%
40% 44% 33%31%57% 51%
41% 34%36% 35% 29%
24% 19% 21% 19%5% 5% 8% 3% 3%
49%35%
20%20%9%13%
26%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Very likely
Somewhat likely
Somewhat unlikely
Very unlikely
But do people believe us?
Investment Trends Pty. Ltd March 2010 Trust Mini Report
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LESSONS FROM MOUTHWASH
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Confidence and speed
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Public responsibility as part of a company’s DNA
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TOP 5 STRATEGIES TO REBUILD TRUST
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Embrace the new stakeholder world
Advocate a transparency culture
Make communications and customer service count
Listen to engage
Use multiple information sources
Top 5 strategies to rebuild trust
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1. Embrace the new stakeholder world
THEN
NOW
Create wealth for shareholders
Create companies that are economically, ethically and socially sustainable
Adapted from Harvard Business Review June 2009
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1. Embrace the new stakeholder world
All stakeholders equally important
52%
Shareholders14%
Customers13%
Society11%
Employees7%
Government3%
Which stakeholder should be most important in CEO decisions?
2010 Edelman Trust Barometer
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1. Embrace the new stakeholder world
Have a voice about the issues that
matter to investors
Don’t just say you care, show it
Engage with internal comms
Start working on your youth
strategy
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2. Advocate a transparency culture
Tell the truthEncourage
people to speak truth to power
Reward contrarians
Practice having unpleasant
conversations
Admit your mistakes
Set information free
Adapted from Harvard Business Review June 2009
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3. Make communications and customer service count
Has ways to connect with customers via social networking sites
Has highly-regarded local advisors
Has highly-regarded and widely admired top leadership
Has a Web site that is informative about investing and provides information on the financial markets
Has a Web site that makes financial transactions easy
Prices its products fairly and competitively
Has customer service available by Web or phone for help or advice
Has investment products that deliver consistent returns to investors
Communicates frequently and honestly
3%
43%
46%
47%
50%
70%
70%
72%
75%
2010 Edelman Trust Barometer
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3. Make communications and customer service count
• Asking, listening and acting• Easy to contact you2 way conversation
• Tailored communication• Personal experience through digital toolsSegmentation
• Accessible online, digital options• Email soon after events
Proactive, current and immediate
• Subscription option, choice of mediums and frequency• Empowerment through education and toolsI’m in control
• Empathy• No spin or marketing fluffReal
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4. Listen to engage
2 way collaborative communication Co-design products
Participate in industry forums
(don’t control them)
Add intimacy (even online)
Research is (will make you) king
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4. Listen to engage – the Bell Direct model
Intimate dinners with the
MD
Participation in industry forums and
blogs
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5. Use multiple information sources
Once
Twice
Three to five times
3 times
4 or 5 times
6 to 9 times
10 or more times
Don't know/refused
25%
6%5%
7% 6%16%
60%35%
Specialist sources
Articles in trusted
publications
Internal experts Activate your advocates
Integrated campaigns work
(who knew?)
2010 Edelman Trust Barometer
How many times in general do you need to hear something about a specific company to believe that the information is likely to be true?
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THE WISDOM OF BRANDING...
The trust trapRebuilding trust in the aftermath of the GFC
March/April 2010