12 MARKETING NEWS | NOVEMBER 30, 2012

If any industry needs an image makeover, it’s financial services. In the years since the global economic collapse of 2008, a flurry of damaging headlines has hammered U.S. banks and invest-ment firms: the billion-dollar fraud of infamous Ponzi schemer Bernie Madoff; rogue traders at investment banks; criticism over

supersized bonuses for big-bank CEOs; the collapse of brokerage firm MF Global in 2011, in which $1.6 billion went missing from customer accounts as the firm fell into bankruptcy; and the Occupy Wall Street movement in 2011 and 2012, in which protesters took to the street in cities across the country—and the world—rallying against a financial sector that they labeled greedy and corrupt.

It’s not surprising that consumer confidence in the financial services industry is at a historic low point. Despite gains in the stock market since March 2009, many investors are fleeing from the market, with the portion of 401(k) accounts allocated to stocks falling from 70% in early 2007 to 61% in July 2012, according to a study by Aon Hewitt, as reported by The Wall Street Journal. Less than 50% of investors have contributed to their portfolios since January 2009 and fewer investors in 2012 than in 2010 believe “now is a good time to invest,” down from 69% in 2010 to 54% in 2012, according to research by St. Louis-based Maritz Inc.

“Investors, as a whole, are extremely frustrated [because of] how they view the system and the people running it. There’s a lot of pessi-mism out there. People tell me all the time that they’re not putting money in the markets simply because they feel like the game is rigged against them and the odds of them coming out ahead aren’t so great,” says Carley Garner, senior market strategist at DeCarley Trading, a Las Vegas-based brokerage firm.

Adds Michael Englund, principal director and chief economist at Boulder, Colo.-based Action Economics, a market analysis firm: “Most people find Wall Street hard to understand and they see it as seedy or irreputable. Because of that, it’s hard for [investment firms] to market sound investment opportunities.”

Investor pessimism obviously presents a marketing conundrum for financial services firms, especially for those that do business with so-called “small investors” who now might be more hesitant to sink their savings into stocks than high-net-worth individuals with larger portfolios. How do you get Main Street Americans to trust Wall Street again?

“People don’t have an appetite for risk,” says Chris Christopher, director of U.S. and global consumer economics at IHS Inc., an Engle-wood, Colo.-based global research and consulting company. “In this

Continued economic uncertainty and Wall Street’s bad rep are souring many consumers on investing, presenting a formidable challenge to financial services marketers. Here’s how one company is working to counteract the negative perceptions and instill consumer confidence.

BY CHRISTINE BIRKNER | STAFF WRITER cbirkner@ama.org

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kind of environment, what a financial institution should do, from a marketing standpoint, is say: ‘You don’t have to worry. Our company doesn’t do things like MF Global.’ But it’s really an uphill battle at this point. It’s going to take time for investor confidence to rebuild.”

Talk to ChuckSan Francisco-based Charles Schwab & Co. Inc. has been taking steps to shore up consumers’ confidence and trust in its financial services, making that the central theme in its B-to-C marketing efforts. “The last survey we did on client trust in Q2 of this year [said] the finan-cial services category is one of the least trusted categories out there. It creates a challenge as a marketer,” says Schwab CMO Jonathan Craig. The company attempts to counteract negative consumer percep-tions by focusing on maintaining customer trust, which is its high-est marketing—and overall business—priority, he says. “We take the issue of client trust very seriously. Instilling and maintaining that trust is essential to everything we do at Schwab.”

Schwab focuses on three key tenets in its marketing: accessibility, transparency and education. At the core of its accessibility messaging is “Talk to Chuck,” a campaign that launched in 2005 and has since evolved into an overall marketing philosophy, Craig says. “ ‘Talk to Chuck’ is more than a campaign. It’s an embodiment of how we go to market in an approachable, transparent and simple way.”

The “Talk to Chuck” logo is included in all of Schwab’s client communications, in print, TV and digital advertising, and on its website. The firm’s latest series of print and digital ads, “Let’s Talk,” is a slight variation on the “Talk to Chuck” slogan, depicting customer interactions as conversations and emphasizing the company’s acces-sibility, Craig says. The print ads, for instance, say: “Let’s talk about how you’re really doing. Not just how you seem to be doing,” and, “Let’s talk about being entrusted with $1.6 trillion in client assets. And how we earn that kind of trust.”

For financial services firms, emphasizing accessibility through marketing platforms like “Talk to Chuck” goes a long way in gain-ing consumer trust, says Mich Bergesen, global director of finan-cial services at Landor Associates, a New York-based global branding firm. “A down-to-earth authenticity … position[s] financial firms as part of society. [It says], ‘We’re one of you.’ It’s not an ‘us and them’ environment. During the financial crisis, there was a sense that the game was rigged. You had the financial institutions on one side and Main Street, the public, on the other side. [Financial institutions] are trying to bring perceptions together and close that gap.”

The concept of accessibility extends to Schwab’s product line, as the company features low-cost exchange-traded funds (ETFs) in its print ads to appeal to investors looking to save money. “Across the investor population, costs matter. ETFs are gaining significant momentum in the marketplace and we wanted to make sure we had some of the lowest-cost options in the industry so that clients can build low-cost, diversified portfolios. At the end of the day, it achieves better financial outcomes for them because costs do act as a drain against long-term financial outcomes,” Craig says.

Lower fees increase Schwab’s relatability factor, Bergesen says. “[Higher fees] were the old Wall Street way. The new Main Street way is to watch the penny. The message is, ‘We all care about costs, so we should all care about low-cost, efficient investments.’ ”

The More You KnowSchwab builds trust by being transparent about the risks involved in investing. The company includes a risk warning in all of its ads that encourages customers to read the fine print by checking out the full prospectus of each product online and listing fees up front. “I can’t overemphasize the importance of transparency. It’s an industry that’s fraught with complexity and the category’s fraught with a high degree of distrust. We see transparency as the antidote to that,” Craig says.

Transparency is essential for financial services firms in attracting new clients and maintaining customer loyalty, DeCarley’s Garner says. “[You need to] let them know exactly what they’re getting into—the risks, the rewards, the good, bad and ugly—before they ever put any money on the line … to build a good rapport with prospective clients. It may take longer for them to come and trade with [you] that way, but it’s better for everybody in the long run because they [become] long-term clients. The risks are high and the rewards are, too, but you have to let them understand exactly what’s at stake.”

Schwab’s digital initiative, Clients Speak, lets clients rate Schwab’s indi-vidual retirement accounts (IRAs) and brokerage accounts on a five-point scale and in categories including customer service, investment help and guidance, website features and fees, and commissions. Launched in 2011, Clients Speak also allows customers to add comments on accounts and indicate whether they would recommend the accounts to others. All reviews are posted on Schwab.com. “We want people to see what other clients are experiencing at Schwab, not just the good, but the bad. If a client has a bad experience, we want to be transparent about it. They can call it out, it’ll be published on Schwab.com and, certainly, we’re going to follow up with them to rectify the experience,” Craig says.

Less than 50% of investors have contributed to their portfolios since January 2009 and fewer investors in 2012 than in 2010 believe “now is a good time to invest,” down from 69% in 2010 to 54% in 2012.

Source: St. Louis-based Maritz Inc.

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“A down-to-earth authenticity… position[s] financial firms as part of society. [It says], ‘We’re one of you.’ It’s not an ‘us and them’ environment. During the financial crisis, there was a sense that the game was rigged. You had the financial institutions on one side and Main Street, the public, on the other side. [Financial institutions] are trying to bring perceptions together and close that gap.”

Mich Bergesen Landor Associates

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Clients Speak helps in the shopping process, particularly for younger clients, Craig says. “The younger generation is a generation that shops online and looks for validation from people other than themselves. When clients are selecting a brokerage firm … they’re looking for vali-dation of what it’s like to be a Schwab client. We can talk about what it’s like to be a Schwab client and we do, but what’s more powerful is clients telling that story. Almost half of our clients come from referrals and that’s a sign to us that we’re building that trust with our client base.”

Knowledge is Investment PowerTransparency also figures highly in Schwab’s educational efforts, as the firm dedicates much of its marketing to helping clients understand its products and highlighting its advisors’ expertise, Craig says. Schwab’s website aims to simplify the investing experience by including educa-tional videos, research reports with information about stocks and other investment products, tips for building a diversified portfolio and market commentary that shows investors how developments in the European debt crisis or interest rate decisions at the Federal Reserve, for instance, might affect their portfolio. “Clients can’t be satisfied investors if they don’t understand where their money is or what products and services are in their portfolios,” Craig says. “We spend a great deal of time help-ing our clients understand the complexity of the industry in simple, bite-sized and engaging ways.”

Educating consumers, and being a voice of reason during uncertain economic times, also helps instill trust, Craig says. “Investors tend to engage more when there’s more volatility and uncertainty, and that feeds into our strategy of being there for our clients when they need it with lots of rich content and deep market insight. We’ve got the insights to get out there and provide meaningful content to clients when they need us.”

A recent study by Boston-based Communispace Corp. on consumer attitudes towards financial institutions ranked “providing people with education to make them feel secure” as one of the top methods that financial services firms could use to relate to customers. “Financial institutions … [need] to help customers make sense of the world. [For] something like the European debt crisis, they need to make that meaningful—not in a macro sense and leave it to the economists, but bring it down to a micro level and tell them what it means to them. They need to make a consumer’s finances accessible to them through information they can digest at the level they want,” says Patricia Hankin, director of client services at Communispace.

One of the most important drivers of customer satisfaction with financial advisors is the advisors’ ability to convey their know-how and expertise, and to help clients navigate through difficult times, says Richard Brose, senior director of strategic consulting in Maritz Research’s financial services group. “It all comes back to having confidence in the guidance you’re getting from your investment provider and [knowing] that they’re staying in tune with the market, they understand what’s going on, they listen to you and understand your needs.”

Schwab is positioning itself above the fray by focusing on customers’ needs and making its brand relatable, Craig says. “We maintain an unambiguous commitment to transparency across everything we do, speak in a simple, straightforward way to break down the complexities that exist in the industry, and bring our clients into the conversation. The sum total of those three, combined with the foundation of trust we started with, allows us to differentiate relative to the rest of the industry.”

But attracting small investors in an uncertain economy will remain a battle until the markets get better, some experts say. “The overall economic environment is overwhelming any marketing effort whatso-ever,” IHS’s Christopher says. “Time is what will help the most. Time and stable markets.” m

“I can’t overemphasize the importance of transparency. It’s an industry that’s fraught with complexity and the category’s fraught with a high degree of distrust. We see transparency as the antidote to that.”

Jonathan Craig Charles Schwab & Co. Inc.

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Financial services media spending in the U.S. has skyrocketed over the past decade, rising from $6.5 billion in 1999 to $10.1 billion in 2011, according to data from Kantar Media, as reported in Ad Age. In 2011, investment and retirement products such as those offered by Charles Schwab made up 11.4% of the financial services media spending category overall, with more media dollars spent on insurance (36.7%), credit cards (12.9%) and consumer banking (12.9%), according to the report. Charles Schwab ranked third on Ad Age/Kantar’s list of the 10 largest investment and retirement product advertisers in 2011, behind FMR Corp./Fidelity and E-Trade Financial Corp.

Big Banks Spending Big Bucks

INVESTMENT AND RETIREMENT PRODUCTS

CREDIT CARDS

CONSUMER BANKING

INSURANCE36.7%

11.4%

12.9%

12.9%

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