How the financial industry gambles away customers’ trust

An industry gambles away its credit

Construction financing: Thus the magazine "advertising and selling" headlines the topic of the current week (5/2008). Subprime crisis and now also a scandal banker who gambled away five billion euros at Société Générale. Also the English bank Northern Rock has difficulties and is looking for buyers. Too much freedom, no controls. This comes as a shock, especially in the financial industry.

In addition one reads in the current restaurant week, with which pushers methods the SEB and the HypoVereinsbank fleece their customers. Negative headlines about financial service providers in the media continue unabated. Things are also bubbling up in the insurance world. After EU intermediary directives, VVG, Mifid reform and Bafin scandal, a new topic is now boiling up: The TV magazine Monitor reported that the Riester pension is counted towards the basic pension. The princes of the financial world (insurance companies, finance and economics ministries) then denounced the Monitor journalists and doubted their professionalism. Then it turned out to be hard facts after all. The topic was also discussed on Maybrit Illner's talk show with Norbert Blüm ("the pension is safe") and financial advisor Bernd W. Klöckner discussed.

Many financial service providers remain silent, bury their heads in the sand and do not answer their customers' questions: "Was my mortgage loan also sold to foreign investors without my knowledge??"Or: "Is there a foreclosure auction coming up that I don't know about yet??"Many customers are unsettled and irritated. And the current development worsens still the perception of the occupational profile "financial service provider. According to the "Trusted Brands" study by Readers Digest, the trustworthiness of financial service providers ranks in fifth last place. Probably still behind cab drivers and farmers the next time around

The financial industry seems to take these accusations in stride. In the Black Monday crash, the stock market values of Allianz slid 10 percent and the German bank fell 7.3 percent. Since Josef Ackermann's "Victory" gesture and the "Peanuts" statement by former board spokesman Hilmar Kopper, trust in the German bank has suffered badly. Open and honest communication is the be-all and end-all in crisis communication. Just think of Vattenfall. New skeletons kept coming out of the closet. In the end, none of the company spokespeople were believed.

The need for action in the financial sector is great and the willingness to act is low. Nico Ziegler, managing director of the PR agency Fischer-Appelt, says that no other industry is as focused on the monetary benefits of press work as the banks. The very industry that manages money is the most stingy with marketing communications. Thereby the necessity is great.

The basic trust in the financial sector is being destroyed. Many customers have the feeling that the entire industry has failed. The commission-referred approach of many managing directors in the financial economy provides for wrong priorities. Through deliberate misadvice (see Wirtschaftswoche 06/2008) and concealment of important details, busy savers are deprived of their hard-earned money for their retirement. Frequent nonsensical switching of deposits also counts as part of this. The focus should be on honest and professional financial advice, not on how financial groups can make even more profits. The banks have completed their refurbishments. Now they are struggling with other problems, they are failing internally: they do not have the gambling instinct of their employees, who are gambling away billions, under control.

Financial service providers only have their eye on the dollar signs? The highest priority should be given to commissions in sales. Investment in brand management is neglected. A lot of potential is wasted. High-quality financial brands are sought in vain. It was not until 2007 that Allianz managed to break into the circle of the top 100 brands, in the "Best Global Brands" determined by Interbrand. Allianz is ranked 80th in this, but Allianz is the fifth largest DAX stock. This is all the more astonishing when you compare how other industries work with their brand value. Other large DAX companies such as Mercedes, BMW and SAP have long understood that investments in brand management pay off in hard cash. They invest in branding and profit from it. Because customers tend to trust and buy from brand-name providers. This is shown by current research from Neuromarketing by Hans-Georg Häusel. When will the financial world finally invest in solid marketing communications?

Many people feel overwhelmed when it comes to the topic of finances. They do not understand the technical jargon and often do not have the time to deal with it. They spend more time on buying a car than on choosing the appropriate retirement plan. Why? Because it's easier to deal with horsepower, consumption and interior design. The professional cannot expect the layman to immediately understand what Riester and Rürup are all about. Consumers spend more money on their cars than on retirement savings because they understand the instructions on the polish bottle. The result: the language used in the financial industry must be simplified. The Commerzbank study from 2004 still holds true. According to this, we are for the most part a nation of financial illiterates. Not everyone can get to grips with the technical terms. Here are some examples of women's knowledge about money from the Commerzbank study "The Psychology of Money":

– 75% avoid money topics
– 56% incorrectly estimate their future pension amount
– 63% do not know what a stock index is

One in three wealthy people in Germany distrusts banks, according to a recent study by the Frankfurt-based BrandControl institute, which surveys 1000 wealthy people twice a year. Trust can only be created through open and sincere communication. And through honest product presentations, without concealing disadvantages. Conclusion: Despite an increase in consumer protection, there is still a lot to be done in the world of finance. Some efforts may be going in the wrong direction. Surely it was good to encourage people to save with the introduction of the Riester pension. However, hiding the fact that the Riester pension counts toward the basic pension was a gigantic mistake. The confidence in a feasible and safe age precaution sinks thereby further. Full education is important and urgently needed for more retirement planning awareness campaigns. Because enough china has already been smashed.

Greetings to the big elephants from Claudia Hilker

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