Trust beyond repair
Trust in institutions is at an all-time, catastrophic low, and there’s no turning back now without a major turn of the tides.
At last year’s national congress, a group of three public accountants from Brisbane were talking to an AMP executive over drinks about their growth strategy for 2018. The SMSF arm of AMP has had a few years of massive growth through acquisition, and the same is on the cards for this year and no doubt the years to come.
The founder of the practice was setting out to do the exact opposite of hunting for growth, giving startling insight to the material implications of the trust factor.
“My referrals are through the roof and I can’t take anyone else on for at least the first quarter — nobody trusts their financial advisers anymore,” he said.
Of course, there’s no implicit fault with financial advisers, rather, it’s a sign of the times: trust has more than ever become a tangible, measurable push/pull factor in business.
To be on the right side of history as public faith in large institutions, political leaders, media and marketing plunges to unsalvageable lows, it’s important to understand where consumer thinking is now at, why it’s there, and why some well-trodden roads to success should be wiped from the map.
In the red
The Edelman Trust Barometer measures consumer sentiment towards core industries, government and the media. The results are in for 2018, and even some creative accounting couldn’t get public trust back in the black.
The US is leading the charge — or more correctly, the plunge — experiencing the largest-ever-recorded drop in overall trust levels among the general population.
Trust among the informed public in the US “imploded,” according to the report, diving a massive 23 points to 45. This makes the US one of the lowest of the 28 markets surveyed, below Russia.
Driving what can only be labelled a collapse is a cataclysmic lack of faith in government. This metric fell 14 points to 33 per cent of the general population maintaining confidence, and among the informed public it fell a whopping 30 points to 33 per cent.
A secondary driver was the declining faith in business institutions, the media, and even non-government organisations (NGOs). Institutions of business, media and NGOs also experienced declines.
“This is the first time that a massive drop in trust has not been linked to a pressing economic issue or catastrophe like the Fukushima nuclear disaster. In fact, it’s the ultimate irony that it’s happening at a time of prosperity, with the stock market and employment rates in the US at record highs. The root cause of this fall is the lack of objective facts and rational discourse,” said Richard Edelman, chief executive of Edelman.
The US is of course at the extreme front of this wave of discontent, but there are patterns which are palpably filtering through to Australian industries and workplaces.
EY recently conducted a workplace survey of global offices, with about 10,000 participants. Less than half of those participants have “a great deal of trust” in their current workplace leaders.
The principles, though less dramatic in scale, are the same as those tearing away at trust in the US. The elements which make up trust for employees are transparency, honesty and delivering on promises. Specifically, the leading features that were ranked as “very important” to a majority of global respondents include:
– “Delivers on promises” (67 per cent)
– “Provides job security” (64 per cent)
– “Provides fair compensation and good benefits” (63 per cent)
– “Communicates openly/ transparently” (59 per cent)
EY has also researched the trustability of institutions like banks, finding transparency about fees and conditions are now more important than ever to a consumer when they make their decision to use services and recommend them. The trust that is born out of this, EY found, is now a crucial differentiator between institutions.
Trust has now become a measurable metric. It can create substantial gain, and irreparable losses.
“Silence is a tax on truth”
If a lack of transparency is driving government, workplace and institutional trust barometers, it follows that clarity, openness and accountability are what creates and builds trust.
Central to this formula in 2018 are traits that will come as welcome news to accountants. Learned skills, qualifications and demonstrated history of expertise are — more than ever — seen as sold features of a trusted and transparent professional.
“In a world where facts are under siege, credentialled sources are proving more important than ever,” said Stephen Kehoe, global chair — reputation, Edelman.
“There are credibility problems for both platforms and sources. People’s trust in them is collapsing, leaving a vacuum and an opportunity for bona fide experts to fill,” he added.
However, the Edelman Trust Barometer found it’s not enough to simply be an honest operator to earn the position of trust — rather, consumers expect the virtues of trust to be championed, celebrated and boldly practised.
“Silence is a tax on the truth. Trust is only going to be regained when the truth moves back to centre stage,” Mr Edelman said.
“Institutions must answer the public’s call for providing factually accurate, timely information and joining the public debate,” he said.
In fact, consumers are demanding that the businesses they engage with and invest in, move to take the place of institutions which were previously trusted to create change, like government.
Edelman’s research found business is now expected to be an “agent of change.” Sixty-four per cent of respondents believe a business can take actions that both increase profits and improve economic and social conditions in the place it operates.
The role of the accountant
This research teaches us two things: your clients expect action to create trust, and though accountants have always held the mantle of trusted adviser, it’s a fickle game in 2018.
Riding a wave of referrals and keeping busy with the clients who already trust you is not catastrophic, but it’s also not forward thinking. Trust is now an asset that needs to be factored into business planning. It’s an expectation of your clients that you are considering and championing trust, it’s not an indulgent or philosophical endeavour.
It has long been the position of the IPA that accountants are the trusted adviser and can do more in the public sphere to promote and solidify that.
A message from chief executive Andrew Conway resonated two years ago at the national congress in Melbourne. Former federal small business minister, Bruce Billson told the crowd: “the world is run by people who show up.”
Mr Conway’s response was potent then and hasn’t shown its age.
“Not just in our own communities, but collectively, we need to be bold in our thinking… shifting our focus from the here and the now to long-term gain,” Mr Conway said.
“So, to the point about the world being run by people who turn up, I would take that a step further,” he said.
“I would say the world is changed by people who stand up.”