I've written before about the reckoning coming once institutions both public and private figure out that the Internet has blown up not just their credibility but their authority to act. It hasn't happened yet, at least not in ways for which we've connected the dots, but I qualify the paralysis in Washington as a serious taste of it, along with the unencumbered activism happening in many state legislatures (which is an example of what happens when institutions no longer represent The People as much as a wacky, imaginary versions of them).
We live in a Age of Distrust and Disbelief, contrary to all the happy blather we read about online. I will double down on my prediction that one of the industries in which we’ll see it made obvious is in financial services.
This concept of trust is a vague and fluid thing. Markets depend on it, as do substantive conversations of any sort. It emerges from a complicated combination of overt actions and implicit beliefs, each of which can be both consciously recognized or unconsciously sensed but both possess compelling meaning. The major economic events over the past few years -- credit crunch, bailouts, mortgage crash, stock market decline and wild fluctuations -- have directly challenged our trust that financial institutions are capable of functioning, let alone doing so fairly. The latest news about MF Global Holdings is but our next serving of the Madoff-ification of financial news. All the chirpy newscasters who tell us why the markets have and risen or fallen seem like useless color commentators talking about a game they don’t understand...or they're outright lying to us about.
Are the OWS protests the turning point? I don't think so, only because I don't think they'll be sustainable once it gets too cold outside (and we of the Inert Class won’t sustain our interest in it, especially when somebody gets shot or freezes to death, which will change the substance of our awareness from a governance issue to watching a crash on the side of the road). But there's also no reason to expect that the horrible and confounding news on the economic front is going to change and suddenly make sense any time soon.
So whether the reckoning happens tomorrow or just gradually, I'm convinced it will come, and the longer that financial brands avoid this inevitability, the worse it'll be for them.
If you buy even a portion of my pitch, the millions that the big financial brands are spending on advertising and marketing these days seems not just irrelevant but self-destructive. It's all the same old song and dance, isn't it? Most of the messaging depends on the premise that the brands can guide people through the insanity (see above), though without any substantiation or commitment (i.e. the brands have no credibility or authority).
Their explicit and implicit promises are impossible to keep. And people are going to figure it out. So what could financial services firms do now to hedge their investments in branding:
- Get Real -- The days of branding content being some absolute or idealized version of reality are long gone, yet the reality quotient of most financial services' marketing resembles that of those happy, good-looking middle-aged couples spots in which they chance upon moments just perfect for taking an erectile dysfunction pill. They should great a reality index to express the percentage of marketing content that at least acknowledges objective reality -- I don't really care how, creatively -- and then strive to increase it with every campaign.
- Get Help -- Creative exploitation and measured abuse of laws and regulations might yield nice year-end bonuses but it doesn’t command much respect or trust from the investing public. I'm not sure that financial brands have the credibility to make any promises in this context, but rather should start looking now to external agencies -- NGOs, consumer groups, whatever -- to find long-term partners who'll help them identify and present content. I predict that the first financial brands that start to really hurt will be those that tried to operate independently of such communities (and they'll be the very same communities that bring them down).
- Change the Game -- Enough with the claim that having been in business a few years ago qualifies you to manage peoples' money, or that properly diversifying investments across many unpredictable, unreasonable markets will make a portfolio predictably reasonable. We need new ideas about how, why, and where real small investors should invest their money. How about actually changing how portfolios are structured, employees are hired, or systems are run? Again, these ideas are already emerging outside of the big firms' purview (micro-markets, local trade, etc.) so the sooner they come up with their own creative ideas, the more likely they'll be a part of the future.
Much of branded marketing overall is detached from reality these days, but the stuff coming from the large financial services firms is particularly head-in-the-sand. Maybe the strategy is to stick to their guns and milk things for all they're worth for as long as they're worth something, but the stuff seems about as forward-looking as a rear-view mirror. I think they could do a lot better, and that there's every reason to do so starting now.
What do you think?