David Armstrong

Editor's Letter: September 2016

Election Rhetoric and Trust

One of the more interesting things about our recent presidential election (and it’s a long list) is that the traditional political battle lines have not only moved, they’ve been decimated—broken into such unrecognizable shapes that the head spins.

Despite the fact that some top names in the investment world support him (Carl Icahn, John Paulson, Anthony Scaramucci and David Malpass, to name a few) Donald Trump, billionaire businessman, fairly holds the mantle as the candidate with the toughest anti-Wall Street rhetoric. The guy, after all, wants to reinstate Glass-Steagall, the Depression-era law that separated commercial and investment banks and was repealed by President Bill Clinton in 1999.  

Trump’s anti-Wall Street rants are, like much else he says, ill conceived, if actually conceived at all. But though he now seems to be bloviating himself into a whirlwind of self-parody, the phenomenon of Trump clearly taps into something important. He seems to be suggesting that businesses and individuals succeed financially in America not because of Wall Street and the institutions of finance, but in spite of it.

Clinton, for her part, is slammed for her “ties” to Wall Street, as if Wall Street were, de facto, the evil empire. The association is enough to cast a cloud over her. For both parties and their supporters, Wall Street, and by extension financial services, is to be viewed with deep suspicion and skepticism.

Advisors, even those who would claim their business models are far away from Wall Street, should take note. It’s unlikely you’ll find your next client at a Donald Trump rally, but the larger shift in sentiment demonstrates there is still deep suspicion about financial services.

A recent study by Americans for Financial Reform shows this. Clearly it’s a partisan group, but a recent phone survey they conducted of 100 adults, evenly split between self-described Republicans and Democrats, found almost all, regardless of party, think financial regulation is important. That’s not particularly surprising. But nearly 60 percent say they still regard Wall Street as a threat to the economy. Only 25 percent believe that government “intervention” has gone far enough, or has gone so far it poses a threat to innovation and economic growth.

The survey also found that more than eight out of ten Democrats (82 percent) support stronger rules against financial services firms, as do two out of three Republicans (66 percent).

Trust, it seems, is still the hardest thing to establish for anyone who handles others’ financial affairs. And the overheated rhetoric of a campaign season doesn’t help. I don’t think advisors can counteract the effect by using words like “fiduciary” or “best interest” or “providing value.” I’m not sure promising “transparent” fee structures will cut it. When financial service is the punching bag on the stump in a national election, advisors will inevitably take part of the blow. 

David Armstrong

Editor in Chief

TAGS: Commentary
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