President Donald J. Trump is delivering on his promises to Wall Street. Earlier this month, he signed an executive order easing many of the financial regulations put in place following the financial crisis of 2008—including loosening provisions of Dodd-Frank Act and paving the way to reverse the Department of Labor fiduciary rule that requires retirement professionals to act in their clients’ best interest. There is also talk of ousting Richard Cordray, the powerful chairman of the Consumer Financial Protection Bureau, the government agency responsible for seeing that financial institutions treat their customers fairly when it comes to mortgages, credit cards and student loans.
Many financial-services executives welcome the changes as a way to free themselves from the cost and burden of regulatory compliance, particularly around rules the industry fought hard to avoid. But, while the lifting of regulations is a positive business development, the period of deregulation creates an incredible messaging challenge for banks, financial advisors and asset management firms. The media, advocacy groups and some legislators aren’t cheering the end of these regulations. In fact, most are already communicating a very different message—lumping all players in the same bad-actor category. Headlines like “Trump’s financial plans promise another Great Recession” and “How Trump Could Make It Easier for Wall Street to Screw You” are having a profound impact on the public discourse.
Deregulation is being painted as a way for financial firms to once again act in their own self-interest – rather than that of their clients – potentially raising negative reputational issues for individual firms and the industry as a whole. In short, some critics are claiming the president is rolling back consumer protections to allow banks and Wall Street to put profits over people.
That’s neither fair nor accurate, but it is reality. Companies that want to set themselves up for success in this new environment will want to take a strategic approach to communications and consider the following:
- Get Out in Front Early: Trouble is coming. Financial firms will want to quickly put a communications plan in place and get in front of the news. When it comes to messaging, a good place to start is on the inside. Communication professionals should work closely with key decision-makers to craft appropriate messaging and educate internal teams. This will ensure that employees are up to speed and can effectively carry the right messages directly to their clients and broader networks. Think first about a positive message strategy built around important themes of trust, client success and safety. Also, be sure to have a crisis-communications plan in place if your firm does have a potential regulatory action lodged against it. Remember, the media will not view such an incident as the work of a single bad actor. More likely, it will be seen as a failure of deregulation. That’s a harder message to fight it you’re not prepared. (Also, make sure you’re not only ready to respond to media, but also if President Trump himself mentions your company in a tweet.)
- Educate and Evangelize: It’s easy to understand why investors may feel uneasy about unwinding regulations less than a decade after the worst financial downturn since the Great Depression. Put yourself in your clients’ shoes and explain why your firm is different and how you plan to earn your clients’ trust. Make it clear that many of the financial firms that played a key role in the crisis are no longer in business—and that your firm will continue to act within your clients’ best interest despite possible changes to the letter of the law. In fact, you can use deregulation as a marketing opportunity, particularly if your firm’s standards exceeded what the regulators previously required.
- Be Strategic…and Be Careful: Once the messaging is in place, it’s important to think about how to communicate with your stakeholders. Message control is paramount. One route is focusing on a pure content strategy—writing and placing a byline in a key financial trade publication and pushing it out through social networks. Firms that want to establish themselves as thought leaders will view this as an opportunity to make their executives the “face of” this issue via TV appearances and interviews with key financial publications. Be mindful, though, that many interview opportunities, particularly those outside of the trade media, might have a hostile bias against deregulation, so you need to both prepare comprehensively prior to each appearance, and also be very selective in what interview opportunities you accept. A good rule of thumb is to prepare for interviews around deregulation the way you might deal with a crisis-communications situation.
- Own Your Actions: The financial industry will be under a microscope for the foreseeable future. This means firms should go out of their way to be open, honest and transparent. If a problem arises, move quickly to address the situation and communicate that with the public. If you are firing executives, make that as public as you can. Most of all, own your mistakes. Take responsibility. Show contrition. Exude humility. Clients are quick to forgive and the media is quick to move on once they feel that a company knows what it did was wrong and took real responsibility for its actions. Owning your actions is the surest way to making sure any crisis is short-lived.
The uncertain political environment creates both opportunities and challenges. Firms that acknowledge and proactively address the very real concerns of investors will be well-positioned to thrive in a less stringent regulatory environment. Those that don’t will be left behind.