Investors wary of scandal

July 12, 2012 | Last updated on July 12, 2012
2 min read

Financial institutions like Barclays and JPMorgan have been hogging the limelight; both have been mired in scandal, with Barclays admitting to manipulating rates and JPMorgan on the hot seat for risky trading.

And the headlines and problems don’t end there; professionals in the U.K. and U.S. are failing to report suspected fraud within their companies, with many afraid or unwilling to uncover company problems.

Read: Professionals failing to report financial fraud

Transparency International also recently named financial firms as the worst globally at disclosing information on revenue and taxes, and HSBC Holdings PLC may be facing a record US$1 billion fine following an investigation into breakdowns in money laundering prevention, reports Financial Times and the Globe and Mail.

Read: Fraud slipping past Canadian regulators

Overall, it seems the credibility of the financial industry is at risk, with many investors not sure who to turn to for credible service.

Read: Corporate boards must manage risk, for the CFA’s take on how to build investor confidence.

One group even launched a “put bankers behind bars” campaign in July, which asks officials to take drastic measures to correct bad behaviour.

The group, Avaaz—a global web movement for people’s politics with 15 million followers—is “concerned about the wave of banking crises that are affecting our economies and our livelihoods.” They’re pushing officials to ensure professionals are held responsible for mistakes.

Its post was shared more than 100,000 times on Facebook and tweeted by more than 10,000 people. You can also IM or Skype the article to your friends and connections.

Amid all of this noise, however, the most important question remains: what can you do to help your clients focus? They don’t need petitions, rallies and toxic headlines; they need support.

Read: Don’t trust toxic headlines

Calling, emailing or meeting to discuss their concerns and worries should be enough to take the edge off. And if needed, talk to them about their future goals and contingency plans.

Read: Saving an endangered client relationship

Some clients may also find a session on defining volatility and risk helpful. When markets are good and stable, investment opportunities are easy to find. But tell your customers that down and even volatile markets can also offer valuable investment opportunities.

Read: The difference between volatility and risk

While potentially risky, they can gain from finding diamonds in the rough, with many of these companies possibly offering huge returns when markets surge again.